HR 3406 IH

To benefit consumers and enhance the Nation's energy security by removing barriers to the development of competitive markets for electric power, providing for the reliability and increased capacity of the Nation's electric transmission networks, promoting the use of renewable and alternative sources of electric power generation, and for other purposes.

December 5, 2001

Mr. BARTON of Texas introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Transportation and Infrastructure, and Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To benefit consumers and enhance the Nation's energy security by removing barriers to the development of competitive markets for electric power, providing for the reliability and increased capacity of the Nation's electric transmission networks, promoting the use of renewable and alternative sources of electric power generation, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Electric Supply and Transmission Act'.

SEC. 2. TABLE OF CONTENTS.

Sec. 1. Short title.

Sec. 2. Table of contents.

Sec. 3. Definitions.

TITLE I--ELECTRIC SUPPLY

Subtitle A--Interconnection; Net Metering; Demand Management

Sec. 101. Interconnection.

Sec. 102. Federal standards for State net metering programs.

Sec. 103. Price-responsive demand programs.

Subtitle B--Provisions Regarding Public Utility Holding Act of 1935

Sec. 111. Definitions.

Sec. 112. Repeal of the public utility holding company act of 1935.

Sec. 113. Federal access to books and records.

Sec. 114. State access to books and records.

Sec. 115. Exemption authority.

Sec. 116. Affiliate transactions.

Sec. 117. Applicability.

Sec. 118. Effect on other regulations.

Sec. 119. Enforcement.

Sec. 120. Savings provisions.

Sec. 121. Implementation.

Sec. 122. Transfer of resources.

Sec. 123. Effective date.

Sec. 124. Conforming amendment to the Federal power act.

Sec. 125. Effect on investment company act regulation.

Subtitle C--Provisions Regarding Public Utility Regulatory Policies Act of 1978

Sec. 131. Findings.

Sec. 132. Prospective repeal.

Sec. 133. Recovery of costs.

Sec. 134. Definitions.

Subtitle D--Redundant Review of Certain Matters

Sec. 141. Repeal of certain provisions of Federal power act regarding disposition of property, consolidation, and purchase of securities.

Sec. 142. Elimination of duplicative antitrust review.

TITLE II--TRANSMISSION OPERATION

Sec. 201. Open access for all transmitting utilities.

Sec. 202. Regional transmission organizations.

TITLE III--TRANSMISSION RELIABILITY

Sec. 301. Electric reliability.

TITLE IV--TRANSMISSION INFRASTRUCTURE

Sec. 401. Sustainable transmission networks rulemaking.

Sec. 402. Transmission siting.

TITLE V--FEDERAL UTILITIES

Subtitle A--Tennessee Valley Authority

Sec. 501. Definitions.

Sec. 502. Wholesale competition in the Tennessee valley region.

Sec. 503. Tennessee valley authority power sales.

Sec. 504. Tennessee valley authority electric generation facilities.

Sec. 505. Renegotiation of power contracts.

Sec. 506. Regulation of Tennessee valley authority transmission system.

Sec. 507. Regulation of Tennessee valley authority distributors.

Sec. 508. Stranded cost recovery.

Sec. 509. Application of antitrust law.

Sec. 510. Savings provision.

Subtitle B--Bonneville Power Authority

Sec. 521. Definitions.

Sec. 522. Regulation of Bonneville transmission system.

Sec. 523. Authority of administrator to participate in regional transmission organization.

Sec. 524. Limitation on retail services.

Sec. 525. Direct service industries.

Sec. 526. Conforming amendments.

Subtitle C--Other Federal Power Marketing Administrations

Sec. 531. Definitions.

Sec. 532. Wholesale power sales by Federal power marketing administrations.

Sec. 533. Regulation of Federal power marketing administration transmission systems.

Sec. 534. Accounting.

Sec. 535. Application of antitrust law.

TITLE VI--CONSUMER PROTECTIONS

Sec. 601. Electric supply unfair trade practices.

Sec. 602. Consumer privacy.

Sec. 603. Aggregation.

Sec. 604. State public purpose charges.

Sec. 605. State authority to order retail electric competition.

Sec. 606. Universal and affordable service.

TITLE VII--INVESTIGATION AND CORRECTION OF ANTICOMPETITIVE CONDUCT

Sec. 701. Uniform investigation authority.

Sec. 702. Uniform refund authority.

Sec. 703. Criminal and civil penalties.

SEC. 3. DEFINITIONS.

Section 3 of the Federal Power Act (16 U.S.C. 796) is amended by adding at the end the following:

`(26) APPROPRIATE REGULATORY AUTHORITY- The term `appropriate regulatory authority' means the entity with authority over the interconnection at issue in the absence of subsections (e) and (f) of section 210. As appropriate to the context, the term shall mean--

`(A) the Commission;

`(B) a State commission;

`(C) a municipality;

`(D) a cooperative that is self-regulating under State law and is not a public utility; or

`(E) an Indian tribe.

`(27) GENERATING FACILITY- The term `generating facility' means a facility that generates electric energy.

`(28) LOCAL DISTRIBUTION UTILITY- The term `local distribution utility' means an entity, including, notwithstanding section 201(f), any State or municipal entity, that owns, controls, or operates a local distribution facility that is used for the sale of electric energy.

`(29) NON-FEDERAL REGULATORY AUTHORITY- The term `non-Federal regulatory authority' means an appropriate regulatory authority other than the Commission.

`(30) MARKET PARTICIPANT- The term `market participant' means any entity that generates, sells, or aggregates electric power (other than State-ordered transition or default service) that is transmitted on the transmission system operated by a regional transmission organization. Any entity that is the owner of the regional transmission organization and does not generate, sell, or aggregate electric power shall not be considered a market participant. An entity is not a market participant by reason of providing State-ordered transition service, default service, or generation service necessary to provide reactive power or such other generation service incidental to providing transmission service.

`(31) OPEN ACCESS- The term `open access', with respect to local distribution facilities, means that the local distribution company that owns, controls, or operates the facilities offers access to the

facilities that is not unduly discriminatory or preferential.

`(32) RETAIL ELECTRIC CONSUMER- The term `retail electric consumer' means any person who purchases electric energy for ultimate consumption.

`(33) RETAIL ELECTRIC SUPPLIER- The term `retail electric supplier' means any person who sells electric energy to a retail electric consumer for ultimate consumption.

`(34) STATE REGULATED ELECTRIC UTILITY- The term `State regulated electric utility' means any electric utility with respect to which a State commission has ratemaking authority.

`(35) BACKUP POWER- The term `backup power' means electricity supplied to a generating facility or retail electric consumer when the generating facility is not operating, in whole or in part, for--

`(A) end use consumption by the generating facility; or

`(B) consumption by the retail electric consumer that receives its electricity supply from the generating facility,

except that the obligation to provide backup power shall not exceed the amount of power historically supplied by the generating facility.

`(36) INDEPENDENT TRANSMISSION COMPANY- The term `independent transmission company' means any entity that owns and operates transmission facilities and is independent of any market participant.'.

TITLE I--ELECTRIC SUPPLY

Subtitle A--Interconnection; Net Metering; Demand Management

SEC. 101. INTERCONNECTION.

(a) INTERCONNECTION TO DISTRIBUTION FACILITIES- Section 210 of the Federal Power Act (16 U.S.C. 824i) is amended by inserting after subsection (e) the following:

`(f) INTERCONNECTION TO DISTRIBUTION FACILITIES-

`(1) INTERCONNECTION-

`(A) IN GENERAL- A local distribution utility shall interconnect a generating facility with the distribution facilities of the local distribution utility if the owner of the generating facility--

`(i) complies with the final rule promulgated under paragraph (2); and

`(ii) pays the costs of the interconnection, including the generating facility's appropriate share of the necessary and reasonable costs associated with any upgrades to system facilities.

`(B) COSTS- The costs of the interconnection shall be--

`(i) just and reasonable,

`(ii) not unduly discriminatory or preferential, and

`(iii) comparable to the costs charged by the local distribution utility for interconnection by any similarly situated generating facility to the distribution facilities of the local distribution utility, as determined by the appropriate regulatory authority.

`(C) APPLICABLE REQUIREMENTS- The right of a generating facility to interconnect under subparagraph (A) does not--

`(i) relieve the generating facility or the local distribution utility of other Federal, State, or local requirements;

`(ii) include a right to transmission or distribution service for the generating facility; or

`(iii) allow the generating facility or its customer to bypass or avoid payment of any costs approved for recovery by the appropriate regulatory authority, or deprive the generating facility or its customer of any rights or arguments it might have to avoid paying such costs.

`(2) RULE-

`(A) IN GENERAL- Not later than 1 year after the date of enactment of this subsection, the Commission shall promulgate a final rule establishing reasonable and appropriate technical standards for the interconnection of a generating facility with the distribution facilities of a local distribution utility, and shall provide for the updating or modification of such standards when appropriate.

`(B) PROCESS- To the extent feasible, the Commission shall develop the standards through a process involving interested parties, and shall rely, where appropriate, on standards developed through independent standard setting organizations.

`(3) RIGHT TO BACKUP POWER-

`(A) IN GENERAL- In accordance with subparagraph (B), a local distribution utility shall offer to provide backup power, as defined in paragraph (35) of section 3, to a generating facility or a retail electric consumer to the extent that the local distribution utility is obligated under State law to provide electricity supply service to retail electric consumers in the area in which the generating facility is located and

`(i) is not subject to an order of a non-Federal regulatory authority to provide open access to its facilities;

`(ii) has not offered to provide open access to its facilities; or

`(iii) does not allow a generating facility to purchase backup power from another entity using its facilities under terms that are just and reasonable, and not unduly discriminatory or preferential.

`(B) RATES, TERMS, AND CONDITIONS- A sale of backup power under subparagraph (A),

for both firm and interruptible backup power service, shall be at such rates and under such terms and conditions, as determined by and filed with the appropriate regulatory authority, as are just and reasonable and not unduly discriminatory or preferential, taking into account--

`(i) the actual incremental cost, whenever incurred by the local distribution utility, to supply such backup power service during the period in which the backup power service is provided, and

`(ii) any capacity charges assessed against similarly situated generating facilities in the area in which the generating facility is located.

`(C) NO REQUIREMENT FOR CERTAIN SALES- A local distribution utility shall not be required to provide backup power for resale.

`(D) NEW OR EXPANDED LOADS- To the extent backup power is used to serve a new or expanded load on the distribution system, the generating facility shall pay the appropriate share of the necessary and reasonable costs associated with any upgrades to transmission, distribution, or generation facilities required to provide such service, as determined by the appropriate regulatory authority.

`(4) ADMINISTRATION-

`(A) BY A NON-FEDERAL REGULATORY AUTHORITY- Except where subject to the jurisdiction of the Commission pursuant to provisions other than subparagraph (B), a non-Federal regulatory authority may administer and enforce the rule promulgated under subparagraph (2)(A) and administer and enforce the requirements of paragraph 3 for backup power.

`(B) BY THE COMMISSION- To the extent that a non-Federal regulatory authority does not administer and enforce the rule or the backup power requirements, the Commission shall administer and enforce the rule or the backup power requirements, as appropriate, with respect to interconnection in that jurisdiction.'.

(b) INTERCONNECTION TO TRANSMISSION FACILITIES- Section 210 of the Federal Power Act (16 U.S.C. 824i) is amended by inserting after subsection (f) (as added by subsection (a) of this Act) the following:

`(g) INTERCONNECTION TO TRANSMISSION FACILITIES-

`(1) INTERCONNECTION-

`(A) DEFINITION- For purposes of this subsection and subsection (h), the term `transmitting utility' means any entity (notwithstanding section 201 (f)) that owns, controls, or operates an electric power transmission facility that is used for the sale of electric energy.

`(B) IN GENERAL- Notwithstanding subsections (a) and (c), a transmitting utility shall interconnect a generating facility with the transmission facilities of the transmitting utility if the owner of the generating facility--

`(i) complies with the final rule promulgated under paragraph (2); and

`(ii) pays the costs of the interconnection, including the generating facility's appropriate share of the necessary and reasonable costs associated with any upgrades to system facilities.

`(C) COSTS-

`(i) IN GENERAL- The costs of the interconnection shall be--

`(I) comparable to the costs charged by the transmitting utility for interconnection by any similarly situated generating facility to the transmission facilities of the transmitting utility, or

`(II) otherwise negotiated and agreed to by the parties, provided that such costs are approved by the Commission as just and reasonable and not unduly discriminatory or preferential.

`(ii) DETERMINATION OF INTERCONNECTION COSTS- A non-Federal regulatory authority that, under section 206(e)(2) (as added by section 201(a) of this Act), is authorized to determine the rates for transmission service on facilities subject to its jurisdiction shall be authorized to determine the costs of any interconnection to such facilities under this subparagraph in accordance with that provision of Federal law.

`(D) APPLICABLE REQUIREMENTS- The right of a generating facility to interconnect under subparagraph (B) does not--

`(i) relieve the generating facility or the transmitting utility of other Federal, State, or local requirements;

`(ii) include a right to transmission or distribution service for the generating facility; or

`(iii) allow the generating facility or its customer to bypass or avoid payment of any costs approved for recovery by the appropriate regulatory authority, or deprive the generating facility or its customer of any rights or arguments it might have to avoid paying such costs.'.

`(2) RULE-

`(A) IN GENERAL- Not later than 1 year after the date of enactment of this subsection, the Commission shall promulgate a final rule establishing reasonable, appropriate, and technically feasible technical standards for the interconnection of a generating facility with the transmission facilities of a transmitting utility.

`(B) PROCESS- To the extent feasible, the Commission shall develop the standards through a process involving interested parties, and shall rely, where appropriate, on standards developed through independent standard setting organizations.

`(3) RIGHT TO BACKUP POWER-

`(A) IN GENERAL- In accordance with subparagraph (B), a local distribution utility that is obligated under State law to provide electricity supply to retail electric consumers in the area in which the generating facility is located shall offer to provide backup power to the generating facility at the interconnection point and to a retail electric consumer, in accordance with the definition set forth in section 3(35), unless--

`(i) Federal, State, or local law (including regulations) allows such a generating facility or retail electric consumer to purchase backup power from an entity other than the local distribution utility; or

`(ii) the local distribution utility allows a generating facility to purchase backup power from an entity other than the local distribution utility using--

`(I) the transmission facilities of the transmitting utility; or

`(II) the transmission facilities of any other transmitting utility that allows such transmission.

`(B) RATES, TERMS, AND CONDITIONS- A sale of backup power under subparagraph (A), for both firm and interruptible backup power service, shall be at such rates and under such terms and conditions, as determined by and filed with the appropriate regulatory authority, as are just and reasonable and not unduly discriminatory or preferential, taking into account--

`(i) the actual incremental cost, whenever incurred by the local distribution utility, to supply such backup power service during the period in which the backup power service is provided, and

`(ii) any capacity charges assessed against similarly situated generating facilities in the area in which the generating facility is located.

`(C) NO REQUIREMENT FOR CERTAIN SALES- A local distribution utility shall not be required to provide backup power for resale.

`(D) NEW OR EXPANDED LOADS- To the extent backup power is used to serve a new or expanded load on the transmission system, the generating facility shall pay the appropriate share of the necessary and reasonable costs associated with any upgrades to transmission, distribution, or generating facilities required to provide such service, as determined by the appropriate regulatory authority.

`(E) ADMINISTRATION-

`(i) BY A NON-FEDERAL REGULATORY AUTHORITY- Except there subject to the jurisdiction of the Commission pursuant to provisions other than clause (ii), a non-Federal regulatory authority may administer and enforce the requirements of this paragraph for backup power.

`(ii) BY THE COMMISSION- To the extent that a non-Federal regulatory authority does not administer and enforce the backup power requirements, the Commission shall administer and enforce the backup power requirements with respect to interconnection in that jurisdiction.'.

(c) TRANSMISSION INTERCONNECTION PROCESS AND PROCEDURES- Section 210 of the Federal Power Act is amended by inserting after subsection (g) (as added by subsection (b)) the following:

`(h) TRANSMISSION INTERCONNECTION PROCESS AND PROCEDURES- (1) Within 180 days of the enactment of this section, the Commission shall issue a rule establishing procedures governing--

`(A) the interconnection of new generating facilities to a transmission system owned or operated by any transmitting utility or any regional transmission organization approved by the Commission; and

`(B) the increase in capacity of an existing generating facility interconnected to a transmission system owned or operated by any transmitting utility or any regional transmission organization approved by the Commission.

Such rulemaking proceeding shall establish interconnection procedures and required elements for interconnection agreements as provided in paragraphs (2) and (3). The Commission shall apply similar procedures and required elements to the interconnection of new generating facilities to a distribution system to the extent that the Commission has jurisdiction to do so pursuant to paragraph (f)(4) of this section. Nothing in this Section or Subsection shall affect the terms and conditions of existing agreements between qualifying facilities and utilities pursuant to 18 CFR 292.

`(2) INTERCONNECTION PROCEDURES- Pursuant to the rulemaking proceeding under paragraph (1) of this subsection, the Commission shall establish interconnection procedures to govern the process in which any transmitting utility or regional transmission organization responds to and resolves interconnection requests. Such procedures shall include provisions governing each of the following:

`(A) The study or studies to be conducted to ensure that the interconnection can occur without compromising the reliability of the system being interconnected.

`(B) The time frames for completing such study or studies.

`(C) The priorities among generating facilities that submit interconnection requests.

`(D) The rights that new generating facilities have upon interconnection.

`(E) Compensation, if and as appropriate, for transmitting utilities or regional transmission organizations for the costs of processing the interconnection requests.

`(F) Criteria for assuring that such interconnections will meet applicable reliability standards and will not adversely affect existing transmission operations or service.

`(G) Criteria for assuring that such interconnections will not violate applicable laws (including safety and environmental laws), rules, or contracts.

Any transmitting utility or regional transmission organization shall include such interconnection procedures in its tariffs filed with and approved by the Commission under section 205 of this Act. The Commission may approve different or additional provisions in the interconnection procedures if the different or additional provisions are substantially comparable with the procedures established by the Commission pursuant to this section.

`(3) REQUIRED ELEMENTS FOR INTERCONNECTION AGREEMENTS- Pursuant to the rulemaking proceeding under paragraph (1) of this subsection, the Commission shall also identify the required elements for interconnection agreements. Each such interconnection agreement shall contain provisions respecting--

`(A) the cost responsibility for facilities necessary to interconnect the new generating facility or for upgrades to the transmission system required to allow the reliable interconnection of the new generating facility;

`(B) the security and creditworthiness requirements for constructing the interconnection facilities or system upgrades;

`(C) the methods for preserving the confidentiality of information exchanged between any new generating facility, and any transmitting utility or regional transmission organization;

`(D) the requirements for operating any new generating facility in parallel with the transmission system; and

`(E) the methods for resolving disputes between any new generating facility, and any transmitting utility or regional transmission organization.

`(4) EXECUTION OF INTERCONNECTION AGREEMENT- Each interconnection agreement under this section shall be executed both by any new generating facility, and by any transmitting utility or regional transmission organization before the commencement of the construction of facilities necessary to interconnect such new generating facility. Such generating facility and transmitting utility or regional transmission organization may agree to different or additional terms and conditions in their interconnection agreement than required under paragraph 3 if they are consistent with the elements for interconnection agreements established by the Commission. The Commission shall resolve any dispute between the parties to such an agreement or any refusal to execute such an agreement within sixty days of notice by either party of the dispute or refusal.

`(5) EXEMPTION FROM COMMISSION APPROVED PROCEDURES- Any transmitting utility or regional transmission organization shall be exempted by the Commission from the requirements of this subsection, upon a showing by the transmitting utility, regional transmission organization, or a generating facility that substantially comparable interconnection procedures and agreements have previously been filed with and approved by the Commission for interconnection with that entity. Any interconnecting generating facility may be entitled to interconnect with that entity under such substantially comparable interconnection procedures and agreements.'.

(d) CONFORMING AMENDMENTS- Section 210 of the Federal Power Act (16 U.S.C. 824i) is amended as follows:

(1) In subsection (a)(1)--

(A) by inserting `transmitting utility, local distribution utility,' after `electric utility,'; and

(B) in subparagraph (A), by inserting `any transmitting utility,' after `small power production facility,'.

(2) In subsection (c)(2)--

(A) in subparagraph (B), by striking `or' at the end;

(B) in subparagraph (C), by striking `and' at the end and inserting `or'; and

(C) by adding at the end the following:

`(D) promote competition in electricity markets, and'.

(3) In subsection (d), by striking the last sentence.

(4) In subsection (e)(1), by inserting `subsections (a) through (d) of' after `used in'.

SEC. 102. FEDERAL STANDARDS FOR STATE NET METERING PROGRAMS.

(a) FINDINGS- The Congress finds that it is in the public interest to:

(1) Enable small businesses, residences, schools, churches, farms, and other retail electric customers who generate electric energy to reduce their electric bills.

(2) Encourage private investment in renewable and unconventional energy resources.

(3) Enhance the diversity of the Nation's electric supply by increasing reliance on a wide range of renewable and other environmentally sound distributed generation technologies.

(4) Reduce price volatility and enhance reliability by reducing peak load on centrally generated power supplies.

(5) Protect the environment by promoting clean energy sources.

(b) NET METERING- Part II of the Federal Power Act is amended by adding the following new section at the end thereof:

`SEC. 215. STATE NET METERING PROGRAMS.

`(a) DEFINITIONS- As used in this section--

`(1) The term `customer generator' means the owner or operator of an electric generation unit qualified for net metering under this section.

`(2) The term `net metering' means measuring the difference between the electricity supplied to a customer-generator and the electricity generated by a customer-generator that is delivered to a local distribution system as the same point of interconnection during an applicable billing period, and providing a crediting to the customer-generator for the net amount, if any, by which the electricity generated by the customer-generator exceeds the electricity supplied to the customer generator during that billing period.

`(3) The terms `electric generation unit qualified for net metering' and `qualified generation unit' mean an electric energy generation unit that meets the requirements of subsection (b)(1) of this section.

`(4) The term `retail electric supplier' means any person that sells electric energy to the ultimate consumer thereof.

`(5) The term `local distribution system' means any system for the distribution of electric energy to the ultimate consumer thereof, whether or not the owner or operator of such system is also a retail electric supplier.

`(b) NET METERING REQUIREMENT- Each State, electric utility not regulated by a State, and Federal power marketing agency shall consider establishing a net metering program, or modifying an existing program, to meet the minimum Federal standards set forth in subsection (c) of this section. If the Commission determines that a State, electric utility not regulated by a State, or Federal power marketing agency has not established a net metering program that meets such minimum standards within 1 year after the effective date of the interconnection standards (for distribution facilities) required under section 210(e) of this Act, the Commission shall establish a program (in such State or in the service territory of such electric utility or Federal power marketing agency) consistent with such standards.

`(c) MINIMUM FEDERAL STANDARDS FOR STATE AND OTHER NET METERING PROGRAMS-

`(1) QUALIFIED GENERATION UNIT- A generation unit that meets the following requirements qualifies for net metering under this section:

`(A) The unit is a fuel cell or uses as its energy source either solar, wind, or biomass.

`(B) The unit has a generating capacity of up to 250 kilowatts.

`(C) The unit is located on premises that are owned, operated, leased, or otherwise controlled by the customer-generator.

`(D) The unit operates in parallel with the retail electric supplier.

`(E) The unit is used primarily to offset part or all of the customer-generator's requirements for electric energy.

`(F) The unit is not intended to offset or provide credits for electric consumption at another location of the customer or for any other customer.

`(2) METERING AND COSTS- The retail electric supplier shall make available upon request net metering service to any customer-generator that the supplier serves if the retail customer-generator pays any incremental costs, including those incurred by suppliers and local distribution systems for equipment or services for safety or performance that are necessary to meet the standards referred to in this section. If a State, nonregulated utility, or Federal power marketing agency determines that the use of a real-time net meter or interval net meter will advance the purposes of this section for such units, a customer-generator in that State (or, in the case of a nonregulated utility or Federal power marketing agency, the relevant service territory) may be required to use the appropriate meter and pay the reasonable incremental costs for such meter and its installation.

`(3) RATES- Rates and charges for retail electric service to customer-generators, including the amount of a net metering credit, shall be established by the appropriate State regulatory authority and nonpublic utilities. To the extent that a State regulatory authority, nonregulated utility, or Federal power marketing agency does not establish such rates and charges, such rates and charges shall be established by the Commission. The rates and charges established pursuant to this section shall be just and reasonable and shall promote the purposes of this section.

`(4) SAFETY AND PERFORMANCE STANDARDS- A qualified generation unit and net metering system used by a customer-generator shall meet all applicable safety and performance and reliability standards established by the national electrical code, the Institute of Electrical and Electronic Engineers, Underwriters Laboratories, or the American National Standards Institute, except that a State may adopt additional or different standards provided that such standard is consistent with the purposes of this section and does not impose an unjust or unreasonable burden on a customer-generator that seeks to participate in the State's net metering program.

`(5) STATE AUTHORITY TO ESTABLISH ADDITIONAL REQUIREMENTS- Consistent with the limits of its jurisdiction under this part, nothing in this section shall preclude a State from establishing or imposing--

`(A) requirements or incentives to encourage qualified generation and net metering that are in addition to or in excess of the minimum standards established in this section (including but not limited to additional eligible fuels, higher capacity limits, and credit amounts that vary by fuel or capacity);

`(B) limits on the State-wide aggregate amount of generating capacity of customer-generators with qualified generation facilities and net metering systems, provided that such limits are not unduly discriminatory and are consistent with the purposes of this section; or

`(C) administrative and enforcement procedures and requirements such State deems necessary or appropriate to implement a net metering program under this section, if such procedures and requirements are consistent with the purposes of this section and does not impose an unjust or unreasonable burden on a customer-generator that seeks to participate in the State's net metering program.

`(6) INTERCONNECTION STANDARDS- Retail electric suppliers and customer-generators shall be subject to Federal interconnection standards established under section 210(e) of this Act (relating to interconnection to distribution facilities).

`(7) NOT A WHOLESALE SALE- A net metering credit under a net metering program established under this section shall not be considered a sale for resale for the purposes of Federal or State law.'.

SEC. 103. PRICE-RESPONSIVE DEMAND PROGRAMS.

(a) FINDING- The Congress finds that price-responsive demand mechanisms are necessary to enable customer participation in wholesale energy markets, reduce loads, improve reliability, expand customer options, and lower costs when bulk energy prices are high.

(b) DEMAND RESPONSE PROGRAMS- The Federal Energy Regulatory Commission shall develop and implement price-responsive demand programs in consultation with the States, regional transmission organizations, electric utilities, Federal power marketing agencies, and the Secretary of Energy. Such programs shall be designed, to the extent practicable, to meet a goal of reducing annual peak demand by at least 5 percent relative to annual peak demand in calendar year 2001. Such programs shall not preempt or displace existing non-Federal price responsive demand programs.

(c) SPECIFIC REQUIREMENTS- Programs implemented under this section shall serve a variety of customer groups and address removal of barriers in utility, market and regulatory arenas that hamper demand-side programs, distributed generation, advanced metering, and other relevant enabling technologies.

Subtitle B--Provisions Regarding Public Utility Holding Act of 1935

SEC. 111. DEFINITIONS.

For purposes of this subtitle:

(1) The term `affiliate' of a company means any company 5 percent or more of the outstanding voting securities of which are owned, controlled, or held with power to vote, directly or indirectly, by such company.

(2) The term `associate company' of a company means any company in the same holding company system with such company.

(3) The term `Commission' means the Federal Energy Regulatory Commission.

(4) The term `company' means a corporation, partnership, association, joint stock company, business trust, or any organized group of persons, whether incorporated or not, or a receiver, trustee, or other liquidating agent of any of the foregoing.

(5) The term `electric utility company' means any company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale.

(6) The terms `exempt wholesale generator' and `foreign utility company' have the same meanings as in sections 32 and 33, respectively, of the Public Utility Holding Company Act of 1935, as those sections existed on the day before the effective date of this subtitle.

(7) The term `gas utility company' means any company that owns or operates facilities used for distribution at retail (other than the distribution only in enclosed portable containers or distribution to tenants or employees of the company operating such facilities for their own use and not for resale) of natural or manufactured gas for heat, light, or power.

(8) The term `holding company' means--

(A) any company that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the outstanding voting securities of a public utility company or of a holding company of any public utility company; and

(B) any person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or pursuant to an arrangement or understanding with one or more persons) such a controlling influence over the management or policies of any public utility company or holding company as to make it necessary or appropriate for the protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this subtitle upon holding companies.

(9) The term `holding company system' means a holding company, together with its subsidiary companies.

(10) The term `jurisdictional rates' means rates established by the Commission for the transmission of electric energy in interstate commerce, the sale of electric energy at wholesale in interstate commerce, the transportation of natural gas in interstate commerce, and the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use.

(11) The term `natural gas company' means a person engaged in the transportation of natural gas in interstate commerce or the sale of such gas in interstate commerce for resale.

(12) The term `person' means an individual or company.

(13) The term `public utility' means any person who owns or operates facilities used for transmission of electric energy in interstate commerce or sales of electric energy at wholesale in interstate commerce.

(14) The term `public utility company' means an electric utility company or a gas utility company.

(15) The term `State commission' means any commission, board, agency, or officer, by whatever name designated, of a State, municipality, or other political subdivision of a State that, under the laws of such State, has jurisdiction to regulate public utility companies.

(16) The term `subsidiary company' of a holding company means--

(A) any company, 10 percent or more of the outstanding voting securities of which are directly or indirectly owned, controlled, or held with power to vote, by such holding company; and

(B) any person, the management or policies of which the Commission, after notice and opportunity for hearing, determines to be subject to a controlling influence, directly or indirectly, by such holding company (either alone or pursuant to an arrangement or understanding with one or more other persons) so as to make it necessary for the protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this subtitle upon subsidiary companies of holding companies.

(17) The term `voting security' means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a company.

SEC. 112. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

The Public Utility Holding Company Act of 1935 (15 U.S.C. 79a and following) is repealed, effective 12 months after the date of enactment of this Act.

SEC. 113. FEDERAL ACCESS TO BOOKS AND RECORDS.

(a) IN GENERAL- Each holding company and each associate company thereof shall maintain, and shall make available to the Commission, such books, accounts, memoranda, and other records as the Commission determines are necessary to identify costs incurred by a public utility or natural gas company that is an associate company of such holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(b) AFFILIATE COMPANIES- Each affiliate of a holding company or of any subsidiary company of a holding company shall maintain, and make available to the Commission, such books, accounts, memoranda, and other records with respect to any transaction with another affiliate, as the Commission determines are necessary to identify costs incurred by a public utility or natural gas company that is an associate company of such holding company and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(c) HOLDING COMPANY SYSTEMS- The Commission may examine the books, accounts, memoranda, and other records of any company in a holding company system, or any affiliate thereof, as the Commission determines are necessary to identify costs incurred by a public utility or natural gas company within such holding company system and necessary or appropriate for the protection of utility customers with respect to jurisdictional rates.

(d) CONFIDENTIALITY- No member, officer, or employee of the Commission shall divulge any fact or information that may come to his or her knowledge during the course of examination of books, accounts, memoranda, or other records as provided in this section, except as may be directed by the Commission or by a court of competent jurisdiction.

SEC. 114. STATE ACCESS TO BOOKS AND RECORDS.

(a) IN GENERAL- Upon the written request of a State commission having jurisdiction to regulate a public utility company in a holding company system, and subject to such terms and conditions as may be necessary and appropriate to safeguard against unwarranted disclosure to the public of any trade secrets or sensitive commercial information, a holding company or its associate company or affiliate thereof, wherever located, shall produce for inspection books, accounts, memoranda, and other records that--

(1) have been identified in reasonable detail in a proceeding before the State commission;

(2) the State commission determines are necessary to identify costs incurred by such public utility company; and

(3) are necessary for the effective discharge of the responsibilities of the State commission with respect to such proceeding.

(b) EFFECT ON STATE LAW- Nothing in this section shall preempt applicable State law concerning the provision of books, accounts, memoranda, or other records, or in any way limit the rights of any State to obtain books, accounts, memoranda, or other records under Federal law, contract, or otherwise.

(c) COURT JURISDICTION- Any United States district court located in the State in which the State commission referred to in subsection (a) is located shall have jurisdiction to enforce compliance with this section.

SEC. 115. EXEMPTION AUTHORITY.

(a) RULEMAKING- Not later than 90 days after the date of enactment of this Act, the Commission shall promulgate a final rule to exempt from the requirements of section 113 any person that is a holding company, solely with respect to one or more--

(1) qualifying facilities under the Public Utility Regulatory Policies Act of 1978;

(2) exempt wholesale generators; or

(3) foreign utility companies.

(b) OTHER AUTHORITY- If, upon application or upon its own motion, the Commission finds that the books, accounts, memoranda, and other records of any person are not relevant to the jurisdictional rates of a public utility company or natural gas company, or if the Commission finds that any class of transactions is not relevant to the jurisdictional rates of a public utility company, the Commission shall exempt such person or transaction from the requirements of section 113.

SEC. 116. AFFILIATE TRANSACTIONS.

Nothing in this subtitle shall preclude the Commission or a State commission from exercising its jurisdiction under otherwise applicable law to determine whether a public utility company, public utility, or natural gas company may recover in rates any costs of an activity performed by an associate company, or any costs of goods

or services acquired by such public utility company, public utility, or natural gas company from an associate company.

SEC. 117. APPLICABILITY.

No provision of this subtitle shall apply to, or be deemed to include--

(1) the United States;

(2) a State or any political subdivision of a State;

(3) any foreign governmental authority not operating in the United States;

(4) any agency, authority, or instrumentality of any entity referred to in paragraph (1), (2), or (3); or

(5) any officer, agent, or employee of any entity referred to in paragraph (1), (2), or (3) acting as such in the course of such officer, agent, or employee's official duty.

SEC. 118. EFFECT ON OTHER REGULATIONS.

Nothing in this subtitle precludes the Commission or a State commission from exercising its jurisdiction under otherwise applicable law to protect utility customers.

SEC. 119. ENFORCEMENT.

The Commission shall have the same powers as set forth in sections 306 through 317 of the Federal Power Act (16 U.S.C. 825e-825p) to enforce the provisions of this subtitle.

SEC. 120. SAVINGS PROVISIONS.

(a) IN GENERAL- Nothing in this subtitle prohibits a person from engaging in or continuing to engage in activities or transactions in which it is legally engaged or authorized to engage on the date of enactment of this Act, if that person continues to comply with the terms of any such authorization, whether by rule or by order.

(b) EFFECT ON OTHER COMMISSION AUTHORITY- Nothing in this subtitle limits the authority of the Commission under the Federal Power Act (16 U.S.C. 791a and following) (including section 301 of that Act) or the Natural Gas Act (15 U.S.C. 717 and following) (including section 8 of that Act).

SEC. 121. IMPLEMENTATION.

Not later than 12 months after the date of enactment of this Act, the Commission shall--

(1) promulgate such regulations as may be necessary or appropriate to implement this subtitle; and

(2) submit to the Congress detailed recommendations on technical and conforming amendments to Federal law necessary to carry out this subtitle and the amendments made by this subtitle.

SEC. 122. TRANSFER OF RESOURCES.

All books and records that relate primarily to the functions transferred to the Commission under this subtitle shall be transferred from the Securities and Exchange Commission to the Commission.

SEC. 123. EFFECTIVE DATE.

This subtitle shall take effect 12 months after the date of enactment of this Act.

SEC. 124. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

Section 318 of the Federal Power Act (16 U.S.C. 825q) is repealed.

SEC. 125. EFFECT ON INVESTMENT COMPANY ACT REGULATION.

(a) GRANDFATHER OF EXISTING HOLDINGS- A person that, on December 31, 2001--

(1) was an affiliate of a holding company, and

(2) held investment securities of one or more companies engaged directly or indirectly in the electric or gas utility business, or other permitted business activities for a registered holding company and its subsidiaries,

shall not be treated as being an investment company under section 3(a)(1)(C) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)(1)(C)) on the basis of investing, reinvesting, owning, holding, or trading any investment securities issued by companies in which such person held such investment securities as of such date.

(b) DEFINITIONS- As used in subsection (a):

(1) HOLDING COMPANY- The term `holding company' has the meaning provided in section 2(a)(7) of the Public Utilities Holding Company Act of 1935 (15 U.S.C. 79b(a)(7)).

(2) AFFILIATE- The term `affiliate' has the meaning provided in section 2(a)(11) of such Act (15 U.S.C. 79b(a)(11)).

(3) INVESTMENT SECURITIES- The term `investment securities' has the meaning provided in section 3(a)(2) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)(2)).

Subtitle C--Provisions Regarding Public Utility Regulatory Policies Act of 1978

SEC. 131. FINDINGS.

The Congress finds that--

(1) implementation of section 210 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 824a-3) resulted in many consumers paying excessive rates for electricity;

(2) the Energy Policy Act of 1992 gives nonregulated producers of electricity additional access to the wholesale electric market through transmission access and exemption from the Public Utility Holding Company Act of 1935; and

(3) in light of the competitive wholesale electric marketplace brought about by the Energy Policy Act of 1992, section 210 of the Public Utility Regulatory Policies Act of 1978 need no longer exist.

SEC. 132. PROSPECTIVE REPEAL.

(a) NEW CONTRACTS- After the date of enactment of this Act, no electric utility shall be required to enter into a new contract or obligation to purchase or to sell electric energy or capacity pursuant to section 210 of the Public Utility Regulatory Policies Act of 1978.

(b) EXISTING RIGHTS AND REMEDIES NOT AFFECTED- Nothing in this section affects the rights or remedies of any party with respect to the purchase or sale of electric energy or capacity from or to a facility determined to be a qualifying small power production facility or a qualifying cogeneration facility under section 210 of the Public Utility Regulatory Policies Act of 1978 pursuant to any contract or obligation to purchase or to sell electric energy or capacity in effect on January 6, 1999, including the right to recover the costs of purchasing such electric energy or capacity.

(c) INTERPRETATIONS AND ACTIONS TAKEN- Nothing in this Act may be deemed or construed as implying congressional ratification of any interpretation of, or any action taken pursuant to, the Public Utility Regulatory Policies Act of 1978.

SEC. 133. RECOVERY OF COSTS.

In order to assure recovery by electric utilities purchasing electric energy or capacity from a qualifying facility pursuant to any legally enforceable obligation entered into or imposed pursuant to section 210 of the Public Utility Regulatory Policies Act of 1978 prior to the date of enactment of this Act of all costs associated with such purchases, the Commission shall promulgate and enforce such regulations as may be required to assure that no utility shall be required directly or indirectly to absorb the costs associated with such purchases from a qualifying facility. Such regulations shall be treated as a rule enforceable under the Federal Power Act (16 U.S.C. 791a-825r).

SEC. 134. DEFINITIONS.

For purposes of this subtitle:

(1) The term `Commission' means the Federal Energy Regulatory Commission.

(2) The term `electric utility' means any person, State agency, or Federal agency, which sells electric energy.

(3) The term `qualifying small power production facility' has the same meaning as provided in section 3(17)(C) of the Federal Power Act.

(4) The term `qualifying cogeneration facility' has the same meaning as provided in section 3(18)(A) of the Federal Power Act.

(5) The term `qualifying facility' means either a small power production facility or a qualifying cogeneration facility.

Subtitle D--Redundant Review of Certain Matters

SEC. 141. REPEAL OF CERTAIN PROVISIONS OF FEDERAL POWER ACT REGARDING DISPOSITION OF PROPERTY, CONSOLIDATION, AND PURCHASE OF SECURITIES.

Section 203 of the Federal Power Act (16 U.S.C. 824b) is repealed.

SEC. 142. ELIMINATION OF DUPLICATIVE ANTITRUST REVIEW.

(a) IN GENERAL- Section 105 of the Atomic Energy Act of 1954 (42 U.S.C. 2135) is amended by striking subsection c. and inserting the following:

`c. CONDITIONS-

`(1) IN GENERAL- A condition for a grant of a license imposed by the Commission under this section in effect on the date of enactment of the Electric Supply and Transmission Act shall remain in effect until the condition is modified or removed by the Commission.

`(2) MODIFICATION- If a person that is licensed to construct or operate a utilization or production facility applies for reconsideration under this section of a condition imposed in the person's license, the Commission shall conduct a proceeding, on an expedited basis, to determine whether the license condition--

`(A) is necessary to ensure compliance with subsection a.; or

`(B) should be modified or removed.'.

(b) SAVINGS PROVISION- (1) Nothing in this section or the amendments made by this section shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.

(2) As used in this subsection, the term `antitrust laws' has the meaning given it in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes the Act of June 19, 1936 (49 Stat. 1526; 15 U.S.C. 13 et seq.), commonly known as the Robinson-Patman Act, and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

TITLE II--TRANSMISSION OPERATION

SEC. 201. OPEN ACCESS FOR ALL TRANSMITTING UTILITIES.

(a) OPEN ACCESS TRANSMISSION AUTHORITY- Section 206 of the Federal Power Act is amended by adding the following new subsection after subsection (d):

`(e) OPEN ACCESS TRANSMISSION SERVICES-

`(1) PUBLIC UTILITIES- Under section 205 and this section, the Commission may, by rule or order, require public utilities to provide transmission services on a not unduly discriminatory or preferential basis, subject to section 212(h). This paragraph applies to any rule or order promulgated by the Commission before, on, or after the date of enactment of this subsection.

`(2) TRANSMITTING UTILITIES- (A) Subject to section 212(h), the Commission may, by rule or order, require transmitting utilities that are not public utilities (other than the Federal power marketing administrations, the Tennessee Valley Authority, and utilities to which section 212(k) applies) to provide transmission services--

`(i) at rates that are comparable to those each such transmitting utility charges itself and that are not unduly discriminatory or preferential, and

`(ii) on terms and conditions (not relating to rates) that are comparable to those required under paragraph (1) for transmission service provided by public utilities.

In exercising its authority under this subparagraph, the Commission may remand transmission rates to a transmitting utility for review and revision where necessary. The Commission may authorize recovery of wholesale stranded costs, as defined by the Commission, arising from any requirement to provide transmission service under this paragraph.

`(B)(i) Within 180 days after the date of enactment of this subsection, after notice and opportunity for comment, the Commission shall adopt rules providing criteria and procedures to exempt certain transmitting utilities from subparagraph (A). The Commission shall exempt from subparagraph (A) any transmitting utility that is a small electric utility that does not own or operate any transmission facilities that are part of the bulk-power system, or that meets other criteria the Commission determines to be in the public interest.

`(ii) The procedures established by the Commission shall permit exemptions, after notice and opportunity for comment, based on a letter application containing a sworn statement, by a representative legally authorized to bind the applicant, attesting to the facts demonstrating that the applicant meets the exemption standards. A good faith application for an exemption shall be deemed granted unless, within 60 days of its receipt of such application, the Commission makes a determination that the applicant does not meet the exemption criteria.

`(iii) Upon complaint of any electric utility or transmitting utility and after notice and opportunity for comment, the Commission may revoke an exemption if it determines the transmitting utility does not satisfy the exemption criteria. In determining whether a transmitting utility owns or operates transmission facilities that are part of the bulk-power system, the Commission shall consider any position taken by an electric reliability organization in the region where the transmitting utility is located.

`(iv) For purposes of this subparagraph, the term `small electric utility' means an electric utility

that sells no more than 4,000,000 megawatt hours of electric energy per year; and the terms `bulk-power system', and `electric reliability organization' have the meanings given such terms in section 218(a).

`(3) CERTAIN WHOLESALE STRANDED COSTS- The Commission shall authorize recovery of wholesale stranded costs of a public utility or transmitting utility that occur when retail electric consumers cease to be served by that public utility or transmitting utility by reason of the establishment of a local distribution company owned or operated by a State or a political subdivision of a State serving such consumers. In calculating such wholesale stranded costs, the Commission shall use a reasonable expectation period that is based on the weighted average remaining useful life of generation assets owned or power purchased under contract by the public utility and included in wholesale or retail rates in effect on July 9, 1996. This paragraph shall apply to wholesale stranded cost determinations made by the Commission before, on, or after the date of enactment of this paragraph.'.

(b) RETAIL WHEELING IN RETAIL COMPETITION STATES- Section 212(h) of the Federal Power Act is amended as follows:

(1) By inserting `(1)' before `No'.

(2) By striking `(1)', `(2)', `(A)', and `(B)' and inserting in their places `(A)', `(B)', `(i)', and `(ii)' respectively.

(3) By striking from redesignated paragraph (1)(B)(ii) `the date of enactment of this subsection' and inserting `October 24, 1992,'.

(4) By adding the following new paragraph at the end:

`(2) Notwithstanding paragraph (1), the Commission may issue an order that requires the transmission of electric energy for purposes of a sale of such energy to retail electric consumers served by local distribution facilities that are subject to open access, consistent with State law.'.

(c) CONFORMING AMENDMENTS- (1) Section 211(a) of the Federal Power Act is amended by striking `for resale'.

(2) Section 212(a) of the Federal Power Act is amended by striking `wholesale' each time it appears, except the last time.

(d) FOREIGN COMMERCE- (1) Section 201(c) of the Federal Power Act (16 U.S.C. 824(c)) is amended by striking `thereof:' and inserting `thereof (including consumption in a foreign country),'.

(2) Section 202(f) of the Federal Power Act is repealed.

SEC. 202. REGIONAL TRANSMISSION ORGANIZATIONS.

Section 202 of the Federal Power Act (16 U.S.C. 824a) is amended by adding the following new subsection after subsection (g):

`(h) REGIONAL TRANSMISSION ORGANIZATIONS-

`(1) DUTY TO PARTICIPATE- The Commission is authorized and directed to order each transmitting utility to participate in a fully operational regional transmission organization not later than 12 months after enactment of this subsection, subject to the procedures and minimum standards established under this subsection. Each transmitting utility that is not a member of a fully operational regional transmission organization (hereinafter in this subsection referred to as an `RTO') approved by the Commission (pursuant to the Commission's Order No. 2000) on the date of the enactment of this subsection shall file with the Commission, within 3 months after such date of enactment, an application to form or join an RTO. If a transmitting utility fails to meet this deadline, the Commission, in consultation with affected State regulatory authorities, is authorized and directed to order such transmitting utility to form or participate in an RTO that meets the standards set forth in paragraph (6) not later than 9 months after the deadline. The Commission shall approve an application submitted under this subsection if the Commission determines that the RTO, including any independent transmission company, proposed in the application meets the minimum standards set forth in paragraph (6). If the Commission finds that the RTO proposed in an application does not meet such standards, the Commission, in consultation with affected State regulatory authorities, shall propose such modifications or conditions to the application as the Commission deems necessary for the proposal to meet the minimum standards. The Commission shall have no authority to mandate (whether directly or as a condition of receiving or retaining any other regulatory approval) the establishment of, participation in, or modification to an RTO except as provided in this section.

`(2) EVIDENTIARY HEARING- At the request of an applicant, the Commission shall hold an evidentiary hearing to determine whether the modifications or conditions the Commission would impose on the applicant are necessary to meet the minimum standards set forth in paragraph (6). A hearing held pursuant to this section shall be subject to the procedural requirements of the Federal Power Act, including the requirements of section 308 providing for interventions by interested parties.

`(3) JUDICIAL REVIEW- The applicant shall have a right of review in the United States Court of Appeals for the District of Columbia of an order imposing modifications or conditions on an application to form or join an RTO. If the applicant petitions the court for review, the RTO proceeding shall be stayed until such time as the reviewing court renders its decision. In establishing its docket, the Court shall expedite the review of petitions brought under this paragraph. If the reviewing court finds, after considering the evidentiary record as a whole, that the Commission's decision is supported by a preponderance of the evidence, the court shall uphold the Commission's decision. If the reviewing court finds, after considering the evidentiary record as a whole, that the Commission's decision is not supported by a preponderance of the evidence, the Commission

shall order the applicant to participate in the RTO proposed by the applicant pursuant to paragraph (1), without modification.

`(4) UNIFORM MARKET RULES- The term `market rules' means rules establishing commercial procedures relating to the provision of transmission services. The Commission is authorized and directed, subject to the limitations on its authority under this subsection, to ensure uniform market rules (including establishment and enforcement of appropriate seams agreements) such as are necessary and appropriate to achieve the policy objectives of the Commission's Order No. 2000. Nothing in this subsection shall interfere with the Commission's authority to ensure uniform market rules through its review of rates, terms and conditions under sections 205 and 206 of this Act. Such rules shall not have the effect of requiring a transmitting utility to participate in a different RTO or modifying the scope, configuration, or governance structure of an RTO deemed to meet the standards of paragraph (6). To implement the requirements of this paragraph, the Commission shall issue a proposed rule within 3 months after the enactment of this section.

`(5) DIVESTITURE- Nothing in this Act or any other Act shall give the Commission authority to order the divestiture of transmission facilities by any transmitting utility to a regional transmission organization.

`(6) STANDARDS FOR RTOS- The standards for regional transmission organizations are as follows:

`(A) INDEPENDENCE- The RTO must be independent of any market participant, pursuant to rules established by the Commission. The RTO must include, as part of its demonstration of independence, a demonstration that it meets the following:

`(i) The RTO, its employees, and any nonstakeholder directors must not have financial interests in any market participant.

`(ii) The RTO must have a decision making process that is independent of control by any market participant or class of participants.

`(iii) The RTO must have exclusive and independent authority under section 205 of this Act to propose rates, terms and conditions of transmission service provided over the facilities it operates. In the case of an RTO that does not own transmission, the transmission owners retain authority under section 206 to seek recovery from the RTO of the revenue requirements associated with the transmission facilities that they own.

`(B) SCOPE AND CONFIGURATION- The RTO must serve an appropriate region. The region must be of sufficient scope and configuration to permit the RTO to maintain reliability, effectively perform its required functions, and support efficient and nondiscriminatory power markets, except that the RTO shall be deemed to satisfy the requirements of this subparagraph if it is structured so that all loads within the boundaries of the RTO shall take service under the RTO's tariff and it complies with either the cost and benefit test set forth in clause (i) or the generation sufficiency test set forth in clause (ii), respectively, of this paragraph.

`(i) COST AND BENEFIT TEST- The proposed RTO complies with the cost and benefit test if the expected benefits of the proposed scope and configuration of the RTO exceed the expected costs of implementing the RTO. The application shall include a cost and benefit analysis addressing the following factors:

`(I) efficient operation of wholesale markets;

`(II) effects on retail electricity rates in each of the affected States;

`(III) effects on attraction of investment capital to fund new transmission capacity needed for the RTO's efficient operation;

`(IV) costs previously incurred by RTO applicants in developing RTOs conditionally approved by the Commission prior to enactment of this Act; and

`(V) other costs and benefits related to RTO formation and participation.

The applicant's cost and benefit analysis shall be presumed to be sufficient to meet the requirements of this clause unless the Commission affirmatively finds by a preponderance of the evidence that the proposed scope and configuration does not meet such requirements.

(ii) GENERATION SUFFICIENCY TEST- The proposed RTO complies with the generation sufficiency test if the RTO satisfies each of the following requirements:

`(I) The RTO has sufficient generation within the RTO's boundaries to serve the load within such boundaries.

`(II) The RTO is able to manage a substantial portion of all congestion of transmission facilities within its boundaries through market mechanisms without assistance from surrounding RTOs.

`(III) The RTO owns or has operational control over transmission facilities that serve at least 50,000 Megawatts of load.

`(C) OPERATIONAL AUTHORITY- The regional transmission organization shall have operational authority for all transmission facilities under its control.

`(D) RELIABILITY- The regional transmission organization shall have the exclusive authority for maintaining the short-term reliability of the grid it operates.

`(E) TRANSMISSION SERVICE- The regional transmission organization shall be the sole provider of transmission service and the sole administrator of a tariff for all facilities under its control, provided that nothing in this subsection shall preclude a public utility from filing with the Commission original or amended rates concerning transmission service on such utility's facilities.

`(F) CONGESTION MANAGEMENT- The regional transmission organization shall agree to develop and maintain market mechanisms to manage congestion.

`(G) PARALLEL PATH FLOW- The regional transmission organization shall agree to develop and implement procedures to address parallel path flows.

`(H) OASIS, ATC AND TTC- The regional transmission organization shall operate a single

Open Access Same Time Information System (OASIS) (as defined by the Commission) for all transmission facilities under its control, and shall calculate total transmission capacity (TTC) and available transmission capacity (ATC).

`(I) ANCILLARY SERVICES- The regional transmission organization must serve as a supplier of last resort for each of the following ancillary services:

`(i) Scheduling, System Control, and Dispatching Services; and

`(ii) Reactive Supply and Voltage Control from Generation Services. For purposes of this subparagraph, the terms `Scheduling, System Control, and Dispatching Services' and `Reactive Supply and Voltage Control from Generation Services' shall be defined by the Commission.

`(J) MARKET MONITORING- The RTO shall have a market monitoring unit responsible for monitoring the regional transmission organization's performance, compliance with its Commission-approved tariff and submission of market data to the Commission for review. The market monitoring unit shall provide market participants the opportunity to address any findings and recommendations.

`(K) PLANNING AND EXPANSION- The regional transmission organization shall develop plans for enhancement and expansion of transmission facilities within its area necessary to serve expected needs. The regional transmission organization also shall have the authority to review and approve all interconnections to the transmission system to ensure that such interconnections do not threaten the reliability of the transmission system under the operational control of the regional transmission organization and are not determined in a discriminatory manner.

`(L) COORDINATION- The regional transmission organization shall have in place provisions for inter-regional coordination, including seams arrangements with neighboring regional transmission organizations.

`(6) EXISTING RTOS- The Commission shall have no authority under this Act or any other law to require a modification in the scope, configuration, corporate structure, governance structure or other structural element of an RTO finally approved without condition by the Commission (pursuant to the Commission's Order No. 2000) before the date of enactment of this subsection. This paragraph shall not be construed to limit the Commission's authority to ensure uniform market rules under paragraph (3).

`(7) SUBSEQUENT MODIFICATION OF RTOS APPROVED UNDER THIS SECTION- If, after final approval of an RTO under this section, the Commission finds that the public interest requires a modification to such RTO, the Commission shall propose such modification. Such modification shall then be deemed a modification or condition to that RTO's approved application within the meaning of subsection (a) of this section and the Commission shall have authority to mandate such modification only subject to all procedures and standards of this section.

`(8) STATE AUTHORITY NOT AFFECTED- Nothing in this section limits the authority of a State to address transmission facility maintenance, planning, siting, and other utility functions in a manner consistent with this Act or Commission action under this Act. This subsection shall not apply to any transmitting utility referred to in section 212(k)(2)(B).'.

TITLE III--TRANSMISSION RELIABILITY

SEC. 301. ELECTRIC RELIABILITY.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended by inserting the following after section 215 as added by this Act:

`SEC. 216. ELECTRIC RELIABILITY.

`(a) DEFINITIONS- For purposes of this section--

`(1) `bulk-power system' means the network of interconnected transmission facilities and generating facilities;

`(2) `electric reliability organization' means a self-regulating organization certified by the Commission under subsection (c) whose purpose is to promote the reliability of the bulk power system; and

`(3) `reliability standard' means a requirement to provide for reliable operation of the bulk power system approved by the Commission under this section.

`(b) JURISDICTION AND APPLICABILITY- The Commission shall have jurisdiction, within the United States, over an electric reliability organization, any regional entities, and all users, owners and operators of the bulk power system, including but not limited to the entities described in section 201(f), for purposes of approving reliability standards and enforcing compliance with this section. All users, owners and operators of the bulk-power system shall comply with reliability standards that take effect under this section.

`(c) CERTIFICATION-

`(1) The Commission shall issue a final rule to implement the requirements of this section not later than 180 days after enactment of this section.

`(2) Following the issuance of a Commission rule under paragraph (1), any person may submit an application to the Commission for certification as an electric reliability organization. The Commission may certify an applicant if the Commission determines that the applicant--

`(A) has the ability to develop, implement, and enforce reliability standards that provide for an adequate level of reliability of the bulk-power system;

`(B) has established rules that--

`(i) assure its independence of the users and owners and operators of the bulk power system; while assuring fair stakeholder representation in the selection of its directors and balanced decision-making in any committee or subordinate organizational structure;

`(ii) allocate equitably dues, fees, and other charges among end users;

`(iii) provide fair and impartial procedures for enforcement of reliability standards through imposition of penalties (including limitations on activities, functions, or operations; or other appropriate sanctions); and

`(iv) provide for reasonable notice and opportunity for public comment, due process, openness, and balance of interests in developing reliability standards and otherwise exercising its duties.

`(4) If the Commission receives two or more timely applications that satisfy the requirements of this subsection, the Commission shall approve only the application it concludes will best implement the provisions of this section.

`(d) RELIABILITY STANDARDS-

`(1) An electric reliability organization shall file a proposed reliability standard or modification to a reliability standard with the Commission.

`(2) The Commission may approve a proposed reliability standard if it determines that the standard is just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission shall give due weight to the technical expertise of the electric reliability organization with respect to the content of a proposed standard, but shall not defer with respect to its effect on competition.

`(3) The electric reliability organization and the Commission shall rebuttably presume that a proposal from a regional entity for a reliability standard to be applicable on an Interconnection-wide basis is just, reasonable, not unduly discriminatory or preferential and in the public interest.

`(4) The Commission shall remand to the electric reliability organization for further consideration a proposed reliability standard that the Commission disapproves in whole or in part.

`(5) The Commission, upon its own motion or upon complaint, may order an electric reliability organization to submit to the Commission a proposed reliability standard or a modification to a reliability standard that addresses a specific matter if the Commission considers such a new or modified reliability standard appropriate to carry out this section.

`(e) ENFORCEMENT-

`(1) An electric reliability organization may impose a penalty on a user or owner or operator of the bulk power system if the electric reliability organization, after notice and an opportunity for a hearing--

`(A) finds that the user or owner or operator of the bulk power system has violated a reliability standard approved by the Commission under subsection (d); and

`(B) filed notice with the Commission, which shall affirm, set aside or modify the action.

`(2) On its own motion or upon complaint, the Commission may order compliance with a reliability standard and may impose a penalty against a user or owner or operator of the bulk power system, if the Commission finds, after notice and opportunity for a hearing, that the user or owner or operator of the bulk power system has violated or threatens to violate a reliability standard.

`(3) The Commission shall establish regulations authorizing the electric reliability organization to enter into an agreement to delegate authority to a regional entity for the purpose of enforcing reliability standards if the agreement satisfies applicable provisions of this section and promotes effective and efficient administration of bulk power system reliability, and may modify such delegation. The Commission shall rebuttably presume that a proposal for delegation to a regional entity organized on an interconnection-wide basis promotes effective and efficient administration of bulk power system reliability. Such regulation may provide that the Commission may assign the electric reliability organization's authority to enforce reliability standards directly to a regional entity consistent with the requirements of this paragraph.

`(4) The Commission may take such action as is necessary or appropriate against the electric reliability organization or regional entity to ensure compliance with a reliability standard or any Commission order affecting the electric reliability organization or regional entity.

`(f) CHANGES IN ELECTRICITY RELIABILITY ORGANIZATION RULES- An electric reliability organization shall file with the Commission for approval any proposed rule or proposed rule change, accompanied by an explanation of its basis and purpose. The Commission, upon its own motion or upon complaint, may propose a change to the rules of the electric reliability organization. A proposed rule or proposed rule change shall take effect upon a finding by the Commission, after notice and opportunity for comment, that the change is just, reasonable, not unduly discriminatory or preferential, is in the public interest, and satisfies the requirements of subsection (c)(2).

`(g) COORDINATION WITH CANADA AND MEXICO-

`(1) The electric reliability organization shall take all appropriate steps to gain recognition in Canada and Mexico.

`(2) The President shall use his best efforts to enter into international agreements with the governments of Canada and Mexico to provide for effective compliance with reliability standards and the effectiveness of the electric reliability organization in the United States and Canada or Mexico.

`(h) RELIABILITY REPORTS- The electric reliability organization shall conduct periodic assessments of the reliability and adequacy of the interconnected bulk-power system in North America.

`(i) SAVINGS PROVISIONS- (1) The electric reliability organization shall have authority to develop and enforce compliance with standards for the reliable operation of only the bulk-power system.

`(2) This section does not provide the electric reliability organization or the Commission with the authority to order the construction of additional generation or transmission capacity or to set and enforce compliance with standards for adequacy or safety of electric facilities or services.

`(3) Nothing in this section shall be construed to preempt any authority of any State to take action to ensure the safety, adequacy, and reliability of electric service within that State, as long as such action is not inconsistent with any organization standard.

`(4) Within 90 days of the application of the electric reliability organization or other affected party, and after notice and opportunity for comment, the Commission shall issue a final order determining whether a state action is inconsistent with an organization standard, taking into consideration any recommendations of the electric reliability organization.

`(5) The Commission, after consultation with the electric reliability organization, may stay the effectiveness

of any state action, pending the Commission's issuance of a final order.

`(j) APPLICATION OF ANTITRUST LAWS-

`(1) IN GENERAL- To the extent undertaken to develop, implement, or enforce a reliability standard, each of the following activities shall not, in any action under the antitrust laws, be deemed illegal per se:

`(A) activities undertaken by an electric reliability organization under this section, and

`(B) activities of a user or owner or operator of the bulk power system undertaken in good faith under the rules of an electric reliability organization.

`(2) RULE OF REASON- In any action under the antitrust laws, an activity described in paragraph (1) shall be judged on the basis of its reasonableness, taking into account all relevant factors affecting competition and reliability.

`(3) DEFINITION- For purposes of this subsection, `antitrust laws' has the meaning given the term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that it includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that section 5 applies to unfair methods of competition.'.

TITLE IV--TRANSMISSION INFRASTRUCTURE

SEC. 401. SUSTAINABLE TRANSMISSION NETWORKS RULEMAKING.

Part II of the Federal Power Act is amended by adding the following new section after section 215, as added by this Act:

`SEC. 216. SUSTAINABLE TRANSMISSION NETWORKS RULEMAKING.

`(a) RULEMAKING REQUIREMENT- Within 1 year after the enactment of this section, the Commission shall establish, by rule, transmission pricing policies and standards for promoting the expansion and improvement of interstate transmission networks through incentive-based and performance-based rate treatments and other means the Commission deems necessary or appropriate to ensure reliability of the electric system, to support interstate wholesale markets for electric power, and expand transmission capacity needed to sustain the growth of wholesale competition. Policies and standards established under this section shall specifically--

`(1) promote economically efficient enlargement of transmission networks, including the provision of proper price signals so that new generation and transmission is built where it provides the lowest overall cost to consumers;

`(2) ensure consistency of gas pipeline pricing and transmission pricing so as to ensure the proper economic signals for generation location, use of alternative energy sources, and for development of distributed generation;

`(3) encourage deployment of transmission technologies to increase capacity of existing networks, including but not limited to high-capacity wires, conductor and phase improvements, power electronics and information technologies, and high voltage direct current lines;

`(4) encourage deployment of transmission technologies to reduce line losses;

`(5) provide a return on equity that causes needed investment in transmission facilities to be made and reasonably reflects the risks associated with changes in regulatory or economic circumstances, including the financial, operational and other risks of turning facilities over to a regional transmission organization;

`(6) promote the voluntary participation in and formation of regional transmission organizations;

`(7) reduce congestion on transmission networks;

`(8) allow for accelerated depreciation for transmission equipment and facilities;

`(9) provide for innovative capital structures;

`(10) promote the implementation of environmentally sound and other low-impact transmission design techniques and facilities;

`(11) promote the efficient use of transmission systems on a real-time basis, and

`(12) improve the reliability and security of transmission networks.

`(b) LIMITATION ON THE AUTHORITY OF THIS SECTION- In the case of any transmission rate approved by the Commission on or after the effective date of the rule established under this section, the rate shall comply with--

`(1) the policies and standards adopted pursuant to this section; and

`(2) the procedural and other requirements of this part, including the requirement of sections 205 and 206, that all rates, charges, terms and conditions be just and reasonable and not unduly discriminatory.

`(c) REPORT- Within 1 year of the issuance of the rule under this section, the Commission shall submit to Congress a report on all transmission pricing policies and standards adopted by the Commission to encourage the economic use and expansion of the transmission network through incentive rates or other similar market-oriented approaches consistent with subsection (a) of this section.

`(d) ANNUAL REPORTS- Beginning 1 year from enactment of this Act, the Commission shall submit annually a report to the Congress assessing the level of transmission investment in the preceding year and an assessment of the level and sufficiency of the Commission's allowed financial returns and other transmission pricing policies promoting economically efficient transmission investment by electric utilities.'.

SEC. 402. TRANSMISSION SITING.

Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended by inserting the following new section after section 216, as added by this Act:

`SEC. 217. FEDERAL TRANSMISSION SITING AUTHORITY.

`(a) CONSTRUCTION PERMIT- The Commission shall approve, after notice and opportunity for hearing, a request of an entity for a permit to construct or modify transmission facilities if it makes each of the following findings:

`(1) A finding that--

`(A) the State in which the transmission facilities are to be constructed or modified is without authority to approve the siting of the facilities, or

`(B) a State commission or body in the State in which the transmission facilities are to be constructed or modified that has authority to approve the siting of the facilities has withheld approval, conditioned its approval in such a manner that the proposed construction or modification is not economically feasible, or delayed final approval for more than one year after the filing of an application seeking approval.

`(2) A finding that the facilities to be authorized by the permit will be used for the transmission of electric energy in interstate commerce.

`(3) A finding that the proposed construction or modification is consistent with the public interest.

The Commission may include in a permit issued under this section conditions consistent with the public interest.

`(b) PERMIT APPLICATIONS- Permit applications under subsection (a) shall be made in writing to the Commission and verified under oath. The Commission shall issue rules setting forth the form of the application, the information it is to contain, and the manner of service of notice of the permit application upon interested persons.

`(c) COMMENTS- In any proceeding before the Commission under subsection (a), the Commission shall afford each State in which a transmission facility covered by the permit is or will be located, each affected Federal agency and Indian tribe, and other interested persons, a reasonable opportunity to present their views and recommendations with respect to the need for and impact of a facility covered by the permit.

`(d) RIGHTS-OF-WAY- If a holder of a permit issued by the Commission pursuant to subsection (a) cannot acquire by contract, or is unable to agree with the owner of the property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain the transmission facility that is the subject of the permit, it may acquire the right-of-way by the exercise of the right of eminent domain in the district court of the United States for the district in which the property to be subject of the right-of-way is located, or in the appropriate court of the State in which the property is located. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as practicable with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated.

`(e) COST RECOVERY- All just and reasonable costs for the construction, operation, and maintenance of transmission facilities developed through a permit issued under subsection (a) shall be recoverable in rates for transmission services associated with these facilities.

`(f) STATE LAW- Nothing in this section shall preclude any person from constructing any transmission facilities pursuant to State law.

`(g) COMPLIANCE WITH OTHER LAWS- Commission action under this section shall be subject to the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and all other applicable Federal laws.'.

TITLE V--FEDERAL UTILITIES

Subtitle A--Tennessee Valley Authority

SEC. 501. DEFINITIONS.

For purposes of this subtitle:

(1) The term `Commission' means the Federal Energy Regulatory Commission.

(2) The term `distributor' means a cooperative organization, municipal or other publicly owned electric power system which on December 31, 1997, purchased all or substantially all of its wholesale power requirements from the Tennessee Valley Authority pursuant to a long-term power sales agreement.

(3) The term `distributor service area' means the geographic area within which a distributor is authorized by State law to sell electric power to retail electric consumers.

(4) The term `electric utility' has the same meaning as provided by section 3(22) of the Federal Power Act (16 U.S.C. 796(22)).

(5) The term `excess electric power' means that portion of the electric power and capacity that is available to the Tennessee Valley Authority and which exceeds the Tennessee Valley Authority's power supply obligations to--

(A) distributors; and

(B) those Tennessee Valley Authority retail electric consumers (or predecessor in interest) that had a contract for the purchase of electric power from the Tennessee Valley Authority on the date of enactment of this Act.

(6) The term `public utility' has the same meaning as provided by section 201(e) of the Federal Power Act (16 U.S.C. 824(e)(1)).

(7) The term `retail electric consumer' has the same meaning as provided by section 3 of the Federal Power Act (16 U.S.C. 796).

(8) The term `Tennessee Valley Region' means the geographic area in which the Tennessee Valley Authority or its distributors were the primary source of electric power on December 31, 1997.

SEC. 502. WHOLESALE COMPETITION IN THE TENNESSEE VALLEY REGION.

(a) AMENDMENTS TO THE FEDERAL POWER ACT- (1) Section 212(f) of the Federal Power Act (16 U.S.C. 824k(f)), relating to interconnection or wheeling orders that result in the sale or delivery of electric power outside the Tennessee Valley Region, is repealed.

(2) Section 212(j) of the Federal Power Act (16 U.S.C. 824k(j)), relating to transmission within the Tennessee Valley Region, is repealed.

(b) AMENDMENTS TO THE TENNESSEE VALLEY AUTHORITY ACT- (1) The third sentence of the first paragraph of section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)), limiting the sale or delivery of electric power outside the area for which the Tennessee Valley Authority or its distributors were the primary source of electric power on July 1, 1957, is repealed.

(2) The second and third paragraphs of section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)) are repealed.

SEC. 503. TENNESSEE VALLEY AUTHORITY POWER SALES.

(a) LIMIT ON RETAIL SALES BY TENNESSEE VALLEY AUTHORITY- Notwithstanding sections 10, 11, and 12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i), the Tennessee Valley Authority shall not sell electric power at retail, except it may sell electric power to--

(1) a retail electric consumer (or predecessor in interest) that had a contract for the purchase of electric power from the Tennessee Valley Authority on the date of enactment of this Act; or

(2) a retail electric consumer who consumes that electric power within a distributor service area, if the applicable regulatory authority (other than the Tennessee Valley Authority) permits any other power supplier to sell electric power to such retail electric consumer.

(3) CONSTRUCTION OF RETAIL ELECTRIC SERVICE FACILITIES- No person shall construct or modify facilities in the service area of a distributor for the purpose of serving a retail electric consumer within the distributor service area without the consent of such distributor, except when such electric consumer is already being served by such person.

(b) WHOLESALE POWER SALES-

(1) EXISTING SALES- Nothing in this subtitle shall be construed to modify or alter the existing obligations of the Tennessee Valley Authority under the first sentence of section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) to sell power to a distributor, except that, with respect to a distributor which--

(A) has made a prior election under section 505(b); and

(B) requests to increase its power purchases from the Tennessee Valley Authority,

this paragraph shall not apply to access by that distributor to power being supplied by the Tennessee Valley Authority to another entity under an existing contract with a term of 1 year or longer.

(2) SALES OF EXCESS ELECTRIC POWER- Notwithstanding sections 10, 11, and 12, or any other provision of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 et seq.), the sale of electric power at wholesale by the Tennessee Valley Authority for use outside the Tennessee Valley Region shall be limited to excess electric power. The Tennessee Valley Authority shall not offer excess electric power under a firm power agreement with a term of 3 years or longer to a new wholesale customer at rates, terms, and conditions more favorable than those offered to any distributor for comparable electric power, taking into account such factors as the amount of electric power sold, the firmness of such power, and the length of the contract term, unless the distributor or distributors that are purchasing electric power under equivalent firm power contracts agree to the sale to the new customer. Nothing in this subsection shall prevent the Tennessee Valley Authority from making exchange power arrangements with other electric utilities when economically feasible.

(d) APPLICATION OF TENNESSEE VALLEY AUTHORITY ACT TO SALES OUTSIDE TENNESSEE VALLEY REGION- The third proviso of section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second and third provisos of section 12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to any sale of excess electric power by the Tennessee Valley Authority for use outside the Tennessee Valley Region.

SEC. 504. TENNESSEE VALLEY AUTHORITY ELECTRIC GENERATION FACILITIES.

(a) GENERATION FACILITIES- Section 15d(a) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(a)) is amended by striking the period at the end of the second sentence and inserting the following: `, if the Corporation determines that the construction, acquisition, enlargement, improvement, or replacement of any plant or facility used or to be used for the generation of electric power is necessary to supply the demands of distributors (as defined in section 501 of the Electric Supply and Transmission Act) and, to the extent permitted by section 503(a) of such Act, retail electric consumers of the Corporation.'.

(b) DISCLOSURE OF INFORMATION- Commencing on the date of enactment of this Act, the Tennessee Valley Authority shall provide distributors and their duly authorized representatives on a confidential basis detailed information on its projections and plans regarding the potential acquisition of new electric generating facilities and shall provide distributors an opportunity to provide comment, not less than 45 days prior to a decision by the Tennessee Valley Authority to make such an acquisition. Any law to the contrary notwithstanding, such confidential information shall not be disclosed by distributor to sources other than the Tennessee Valley Authority, except--

(1) in response to process validly issued by any court or governmental agency having jurisdiction thereof;

(2) to any officer, agent, employee, or duly authorized representative of distributor who has agreed to the same confidentiality and nondisclosure obligation applicable to distributor;

(3) in any judicial or administrative proceeding initiated by distributor contesting action by the Tennessee Valley Authority to cause the construction of new electric generation facilities; or

(4) 3 years following the commercial operating date of the electric generating facilities.

SEC. 505. RENEGOTIATION OF POWER CONTRACTS.

(a) RENEGOTIATION- Following the date of enactment of this Act, the Tennessee Valley Authority and the distributors shall make good faith efforts to renegotiate their existing power contracts.

(b) DISTRIBUTOR CONTRACT TERMINATION OR REDUCTION RIGHT- If a distributor and the Tennessee Valley Authority are unable by negotiation to arrive at a mutually acceptable replacement contract to govern the post-enactment relationship, then the Tennessee Valley Authority shall allow such distributor to give notice, which notice may be given once each calendar year and only within the

60-day period that follows either the date of enactment of this Act or any subsequent anniversary of the date of enactment of this Act--

(1) to terminate the contract to purchase wholesale electric energy from the Tennessee Valley Authority that was in effect on the date of enactment, such termination to be effective 3 years after the giving of such notice; or

(2) to reduce the quantity of its wholesale power requirements under the contract to purchase wholesale electric energy from the Tennessee Valley Authority that was in effect on the date of enactment by up to 10 percent of its requirements, such reduction to be effective 2 years after the giving of such notice, or by more than 10 percent of its requirements, such reduction to be effective 3 years after the giving of such notice, and to negotiate with the Tennessee Valley Authority to adapt the contract that was in effect on the date of enactment to reflect a partial requirements relationship.

(c) PARTIAL REQUIREMENTS NOTICE- As part of any notice provided under subsection (b)(2), a distributor shall identify the annual quantity of electric energy which it will be acquiring from a source other than the Tennessee Valley Authority as the result of its election and times of the day and year that specified amounts of such energy will be received by the distributor.

(d) NONDISCRIMINATION- The Tennessee Valley Authority shall not unduly discriminate against any distributor as the result of the exercise of notice under either subsection (b)(1) or subsection (b)(2) by such distributor or its status as a partial requirements customer.

SEC. 506. REGULATION OF TENNESSEE VALLEY AUTHORITY TRANSMISSION SYSTEM.

Notwithstanding sections 201(b)(1) and 201(f) of the Federal Power Act, sections 205, 206, 208, and 210 through 213 and sections 301 through 304, 306, 307 (except the last sentence of subsection (c)), 308, 309, 313, and 317 of the Federal Power Act apply to the transmission and local distribution of electric power by the Tennessee Valley Authority to the same extent and in the same manner as such provisions apply to the transmission of electric power in interstate commerce by a public utility otherwise subject to the jurisdiction of the Commission under part II of such Act

SEC. 507. REGULATION OF TENNESSEE VALLEY AUTHORITY DISTRIBUTORS.

(a) ELECTION TO REPEAL TENNESSEE VALLEY AUTHORITY REGULATION OF DISTRIBUTORS- Upon the election of a distributor, the third proviso of section 10 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831i) and the second and third provisos of section 12 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831k) shall not apply to wholesale sales of electric power by the Tennessee Valley Authority in the Tennessee Valley Region after the date of enactment of this Act, and the Tennessee Valley Authority shall not be authorized to regulate, by means of rules, contract provisions, resale rate schedules, contract termination rights, or any other method, any rates, terms, or conditions imposed on the resale of such electric power by such distributor, or any rates, terms, or conditions for the use of local distribution facilities.

(b) AUTHORITY OF GOVERNING BODIES OF DISTRIBUTORS- Any regulatory authority exercised by the Tennessee Valley Authority over any distributor making an election authorized in subsection (a) shall be exercised by the governing body of such distributor, in accordance with the laws of the State in which it is organized. In the event a distributor does not make the election authorized in subsection (a), the provisions of the Tennessee Valley Authority Act specified in that subsection shall continue to apply for the duration of any wholesale power contract between the Tennessee Valley Authority and the distributor, according to its terms.

(c) USE OF FUNDS- In any contract between the Tennessee Valley Authority and a distributor for the purchase of at least 70 percent of the distributor's requirements for the sale of electric power, the Tennessee Valley Authority shall include such terms and conditions as may be reasonably necessary to assure that the financial benefits of a distributor's electric system operations are allocated to the distributor's retail electric consumers.

(d) REMOVAL OF PURPA RATEMAKING AUTHORITY- Section 3(17) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2602(17)) is amended by striking `, and in the case of an electric utility with respect to which the Tennessee Valley Authority has ratemaking authority, such term means the Tennessee Valley Authority'.

SEC. 508. STRANDED COST RECOVERY.

(a) COMMISSION JURISDICTION- The Tennessee Valley Authority may recover any wholesale stranded costs that may arise from the exercise of rights by a distributor pursuant to section 505 of this subtitle to the extent authorized by the Commission based on application of the rules and principles the Commission applies to wholesale stranded cost recovery by other electric utilities within its jurisdiction, provided that the Tennessee Valley Authority shall not be authorized to recover from any distributor any wholesale stranded costs related to loss of sales revenues by the Tennessee Valley Authority, or its expectation of continuing to sell electric energy, for any period after September 30, 2007. The exercise of rights by a distributor under section 505 of this subtitle shall not affect a claim by the Tennessee Valley Authority that it may have for recovery of stranded costs prior to October 1, 2007. This subsection shall apply notwithstanding the absence of provision addressing wholesale stranded cost recovery in a power sales agreement between the Tennessee Valley Authority and a distributor executed after the date of enactment of this Act.

(b) DEBT- Stranded costs recovered by the Tennessee Valley Authority under subsection (a) shall be used to pay down the Tennessee Valley Authority's debt to the extent determined by the Tennessee Valley Authority to be consistent with proper financial management. The Tennessee Valley Authority may not use amounts recovered to pay for additions to the Tennessee Valley Authority's generation capacity.

(c) UNBUNDLING- Any stranded cost recovery charge authorized by the Commission to be assessed by the Tennessee Valley Authority shall be unbundled from the otherwise applicable rates and charges to such customer and separately stated on the bill of such customer.

The Tennessee Valley Authority shall not recover wholesale stranded costs from any customer through any other rate, charge, or mechanism.

(d) REPORT- Beginning in fiscal year 2001, as part of the annual management report submitted by the Tennessee Valley Authority to Congress, the Tennessee Valley Authority shall also specifically report--

(1) the status of the Tennessee Valley Authority's long-range financial plans and the progress toward its goal of competitively priced electric power, and a general discussion of the Tennessee Valley Authority's prospects on meeting the objectives of the Ten Year Business Outlook issued on July 22, 1997;

(2) any changes in assumptions since the previous report that may have a material effect on the Tennessee Valley Authority's long-range financial plans;

(3) the source of funds used for any generation and transmission capacity additions;

(4) the use or other disposition of amounts recovered by the Tennessee Valley Authority under the Tennessee Valley Authority Act and this subtitle;

(5) the amount by which the Tennessee Valley Authority's publicly held debt was reduced; and

(6) the projected amount by which the Tennessee Valley Authority's publicly held debt will be reduced.

SEC. 509. APPLICATION OF ANTITRUST LAW.

(a) IN GENERAL- The Tennessee Valley Authority shall be subject to the antitrust laws of the United States with respect to the operation of its electric power and transmission systems. For purposes of this section, the term `antitrust laws' has the meaning given such term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

(b) DAMAGES- No damages, interest on damages, costs, or attorneys' fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or 15c) from the Tennessee Valley Authority.

(c) ASSOCIATION FOR ADVOCACY- Nothing in this subtitle shall diminish or impair any privileges, immunities, or exemptions prior to enactment that would have been accorded any person by virtue of their association together in advocating their cause and points of view to the Tennessee Valley Authority or any other agency or branch of Federal, State, or local government.

SEC. 510. SAVINGS PROVISION.

Nothing in this subtitle shall affect section 15d(b) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(b)), providing that bonds issued by the Tennessee Valley Authority shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States.

Subtitle B--Bonneville Power Authority

SEC. 521. DEFINITIONS.

As used in this subtitle:

(1) The term `Bonneville Administrator' means the Administrator of the Bonneville Power Administration.

(2) The term `Bonneville Transmission System' means transmission facilities owned or leased by the United States, acting through the Bonneville Administrator, and operated by the Bonneville Power Administration or operated by another entity under section 523 of this subtitle.

(3) The term `Commission' has the meaning given that term in section 3 of the Federal Power Act (16 U.S.C. 796).

(4) The term `Pacific Northwest' has the meaning given that term in section 3(14) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839a(14)).

SEC. 522. REGULATION OF BONNEVILLE TRANSMISSION SYSTEM.

(a) IN GENERAL- After September 30, 2002, or the date the Bonneville Transmission System is participating in a regional transmission organization, whichever is earlier, notwithstanding section 201(f) of the Federal Power Act, sections 202(h), 205, 206, 208, 210 through 213, 301 through 304, 306, 307 (except the last sentence of subsection (c)), 308, 309, 313, and 317 of that Act shall apply to the Bonneville Transmission System and the transmission of electric energy over the Bonneville Transmission System.

(b) TRANSITION PROVISION- The Bonneville Administrator's transmission rates, terms, and conditions filed with the Commission prior to October 1, 2001, and approved by the Commission, shall continue in effect until superseded by rates, terms, and conditions that are filed with the Commission under this Act to be effective no later than October 1, 2003.

(c) ADDITIONAL RULES- Any determination or approval by the Commission of rates, terms, and conditions for the transmission of electric energy under subsection (a) shall be subject to the following rules:

(1) Phasing in changes in transmission rates or charges that would cause unreasonable cost shifts among transmission customers if implemented at once.

(2) Mitigating unreasonable adverse effects on transmission customers that would otherwise result from changes in the historical treatment of costs to acquire transmission to serve customers historically served by General Transfer Agreements entered into between the Bonneville Administrator and other utilities prior to the enactment of this Act.

(3) No direct assignment of the costs of transmission facilities that were included in the Bonneville Administrator's rolled-in network transmission rates in effect on October 1, 2001, or of the costs for replacement of such facilities.

(4) Assuring the transmission rates and charges are established sufficient to--

(A) recover in a timely fashion the Federal investment in the Bonneville Transmission System over a reasonable number of years after first meeting all the Bonneville Power Administrator other transmission costs and expenses; and

(B) produce the revenues necessary to assure timely payment of all transmission-related costs and expenses.

(5) Costs and revenues shall be allocated to the Bonneville Transmission System in accordance with rules to be promulgated by the Commission.

(6) Rules established by the Commission to--

(A) assure transmission access is provided over the Bonneville Transmission System for hydroelectric power that must be generated and transmitted at a particular time in order to reduce levels of dissolved nitrogen gas harmful to fish, with such access to be provided in a manner that displaces the output of other generation using the Bonneville Transmission System but does not impair service to loads, require operations that may damage generation facilities, or alter commercial relationships between the power supplier whose generation was displaced and its customer; and

(B) provide methods for compensation between or among the hydroelectric power marketer and the party or parties affected by the displacement.

(d) APPLICABILITY- Subsection (a) shall not apply to--

(1) the Bonneville Power Administration's activities other than transmission of electric energy over the Bonneville Transmission System; or

(2) a contract in effect on the date of enactment of this Act, except for transmission rates which are adjustable by the Bonneville Administrator under the contract; a treaty of the United States; or a contract concerning the delivery of electric energy and capacity entered into by entities designated pursuant to such a treaty.

(e) PRIORITY OF PAYMENTS- Nothing in this section shall alter or be construed to alter the priority of payments established in section 13(b) of the Federal Columbia River Transmission System Act (16 U.S.C. 838k(b)) or the requirements of section 11 of that Act (16 U.S.C. 838i).

(f) SECURITY- (1) Notwithstanding any other law, any statutory and other authorities in effect on October 1, 1998, of the Bonneville Administrator to establish, and of the Commission to confirm and approve, a surcharge on rates or charges for transmission services over the Bonneville Transmission System for the recovery of costs that--

(A) relate to any generation or conservation resources financed by debt issued by a non-Federal party before October 1, 1998 (and any refundings and refinancings thereof),

(B) are secured by an obligation of the Bonneville Administrator to make payments or net bill power and transmission service, and

(C) cannot be timely recovered through power rates and charges and paid in accordance with the application of revenues and priority of payments specified by section 13(b) of the Federal Columbia River Transmission System Act of 1974 (16 U.S.C. 838k(b)), shall continue in full force and effect for the purposes of such recovery.

Recovery of such costs shall be allowed only to the extent that it would have been allowed under laws applicable to the Bonneville Administrator as of October 1, 1998. In reviewing the Administrator's filing of a surcharge under this paragraph, the Commission shall apply the standard of review applicable as of October 1, 1998.

(2) Any amount recovered through any transmission surcharge under paragraph (1) shall be treated as a loan to the Bonneville Power Administration's power function from the transmission function and shall bear interest at a rate determined appropriate by the Commission. The Bonneville Power Administration's power function shall repay the loans as soon as reasonably possible after the Bonneville Administrator determines that power revenues are sufficient to meet the Administrator's other power cost recovery and Treasury repayment obligations on an annual basis. To the extent reasonably practicable, the Administrator shall refund all or a portion of the surcharge collected from transmission customers with a higher priority of payment accorded those transmission customers that purchased no or a lesser amount of power from the Bonneville Power Administration in the 5 years prior to the effective date of the surcharge as directed and determined appropriate by the Commission.

(g) HEARINGS- Any proceeding to approve or fix transmission rates and charges pursuant to this part shall be conducted in the Pacific Northwest.

SEC. 523. AUTHORITY OF ADMINISTRATOR TO PARTICIPATE IN REGIONAL TRANSMISSION ORGANIZATION.

Notwithstanding any other provision of law, the Bonneville Administrator is authorized to make contractual and other arrangements for the transfer of control and use of the Bonneville Transmission System to a regional transmission organization comprised of all or part of the geographic areas specified in FERC Docket RTO-35-000, filed on October 15, 2000, that meets or proposes to meet the minimum characteristics and functions of a regional transmission organization required by the Commission. The Administrator's contracts and other arrangements for participation shall set forth terms and conditions the Administrator determines are necessary or appropriate, and shall include terms that assure the recovery of all the Administrator's transmission costs and expenses, and consistency with the Administrator's existing contracts and existing third-party financing obligations. The contracts for participation may provide for the resolution of disputes through arbitration or other means with the entity or with other participants. The Bonneville Administrator shall maintain effective oversight of the regional transmission organization's fulfillment of the contractual and other terms and conditions required by the Administrator, and shall maintain the ability to terminate the Bonneville Transmission System's participation in the regional transmission organization if the organization fails to materially satisfy those terms and conditions. The statutory authorities and duties of the Secretary of Energy and the Bonneville Administrator with respect to the Bonneville Transmission System shall be suspended for the period of the contract of participation, including extensions or renewals thereof, insofar as they are to be accomplished

through the Administrator's contracts and other arrangements for participation, and except for those matters that the Administrator determines are not to be fulfilled by the regional transmission organization.

SEC. 524. LIMITATION ON RETAIL SERVICES.

Notwithstanding section 5(a) of the Bonneville Project Act (16 U.S.C. 823d(a)), the Administrator shall not sell electric energy or capacity to any consumer, except for any consumer that did have a contract for purchase of electric energy from the Bonneville Power Administration for use at specific facilities on October 1, 2001. This restriction shall not apply to sales to a Federal agency or to an assignee, subsidiary, affiliate, or successor in interest, whether through sale, transfer or otherwise, of a consumer that did have a contract for purchase of electric energy from the Bonneville Power Administration for use at specific facilities on October 1, 2001. For purposes of this section, the term `consumer' has the meaning given such term in section 3(5) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839a(5)).

SEC. 525. DIRECT SERVICE INDUSTRIES.

The Administrator of the Bonneville Power Administration shall negotiate power sales contracts with all willing Northwest aluminum direct service industrial customers beyond the term of currently effective BPA power supply contracts. The Secretary of Energy or his designee within the Department of Energy shall review the terms of such negotiated contracts and ensure that they provide for continued access to a reasonable level of federal firm power, at a rate established under 16 U.S.C. 839e(c), that will enable such customers to operate their facilities in the Pacific Northwest in an economic manner for the long term.

SEC. 526. CONFORMING AMENDMENTS.

(a) FEDERAL POWER ACT- (1) Section 212(i) of the Federal Power Act (16 U.S.C. 824(i)) is repealed.

(2) Section 306 of the Federal Power Act is amended by inserting `agency or instrumentality of the United States,' after `person' in the first sentence.

(3) Section 313 of the Federal Power Act is amended by inserting `agency or instrumentality of the United States,' after `person,' in the first sentence.

(b) FEDERAL COLUMBIA RIVER TRANSMISSION SYSTEM ACT- (1) Section 3(c) of the Federal Columbia River Transmission System Act (16 U.S.C. 838a(c)) is amended by inserting `, and transmission facilities with an estimated capital cost exceeding $50,000,000 in 1998 dollars, adjusted using the United States Gross Domestic Product Implicit Price Deflator Index', after `own facilities'.

(2) Section 6 of the Federal Columbia River Transmission System Act (16 U.S.C. 838d) is repealed.

(3) Section 9 of the Federal Columbia River Transmission System Act (16 U.S.C. 838g) is amended to read as follows:

`SEC. 9. RATES AND CHARGES.

`Schedules of rates and charges for the sale, including dispositions to Federal agencies, of all electric power made available to the Administrator pursuant to section 8 of this Act or otherwise acquired shall be established--

`(1) with a view to encouraging the widest possible diversified use of electric power at the lowest possible rates to consumers consistent with sound business principles;

`(2) having regard to the recovery (upon the basis of the application of such rate schedules to the capacity of the electric facilities of the projects) of the cost of producing such electric power, including the amortization of the capital investment allocated to power over a reasonable period of years and payments provided for in section 11(b)(9) of this Act; and

`(3) at levels to produce such additional power revenues as may be required, in the aggregate with all other power revenues of the Administrator, to pay when due--

`(A) the principal of, premiums, discounts, and expenses in connection with the issuance of and interest on all bonds issued and outstanding pursuant to this Act for all actions other than the construction, acquisition, and replacement of the Federal transmission system; and

`(B) amounts required to establish and maintain reserve and other funds and accounts established in connection therewith.

Electric power rates under this section shall be established by the Administrator in accordance with section 7 of the Pacific Northwest Electric Power Planning and Conservation Act.'.

(4) Section 10 of the Federal Columbia River Transmission System Act (16 U.S.C. 838h) is repealed.

(c) REGIONAL PREFERENCE ACT- Section 6 of Public Law 88-552 (16 U.S.C. 837e), commonly known as the `Regional Preference Act', is amended by striking `Federal energy or' in the first sentence and by striking the second sentence.

(d) NORTHWEST POWER ACT- (1) Section 7(a)(1) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(1)) is amended to read as follows:

`(1) The Administrator shall establish, and periodically review and revise, rates for the sale and disposition of electric power and shall periodically review and, if necessary, propose revisions to rates for the transmission of electric power. Rates for the sale and disposition of electric power shall be established and, as appropriate, revised to recover, in accordance with sound business principles, the costs associated with the acquisition and conservation of electric power, including the amortization of the Federal investment in the Federal Columbia River Power System that is allocable to electric power rates (including irrigation costs required to be repaid out of electric power revenues) over a reasonable period of years and the other costs and expenses incurred by the Administrator pursuant to this Act and other provisions of law. Rates for the sale and disposition of electric power shall be established in accordance with section 9 of the Federal Columbia River Transmission System Act (16 U.S.C. 838g), section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), and this Act.'.

(2) Section 7(a)(2) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(a)(2)) is amended as follows:

(A) By striking `Rates' and inserting `Power rates'.

(B) By inserting `and' after the comma in subparagraph (A).

(C) By striking `, and' and inserting a period at the end of subparagraph (B).

(D) By striking subparagraph (C).

(3) Section 7(i) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839e(i)) is amended by inserting `power' after `establishing' in the first sentence.

(4) Section 9(d) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839f(d)) is amended by striking `transmission access,' and inserting `power' before `services' in the second sentence.

(5) Section 9(i)(3) of the Pacific Northwest Electric Power Planning and Conservation Act (16 U.S.C. 839f(i)(3)) is amended by inserting `power' before `services' each place it appears, and by striking `transmission,' in the first sentence.

(e) BONNEVILLE PROJECT ACT- Section 2(e) of the Bonneville Project Act (16 U.S.C. 832a(e)) is amended by striking the colon and all that follows and inserting a period.

Subtitle C--Other Federal Power Marketing Administrations

SEC. 531. DEFINITIONS.

For purposes of this subtitle:

(1) The term `Administrator' means the administrator of a Federal power marketing administration.

(2) The term `Commission' means the Federal Energy Regulatory Commission.

(3) The term `Federal power marketing administrations' means the Western Area Power Administration, Southwestern Power Administration, and Southeastern Power Administration.

(4) The term `power generating agencies' means the Bureau of Reclamation, the Army Corps of Engineers, and the International Boundary and Water Commission.

(5) The term `public utility' means a public utility as defined in section 201(e) of the Federal Power Act.

SEC. 532. WHOLESALE POWER SALES BY FEDERAL POWER MARKETING ADMINISTRATIONS.

(a) RATES, TERMS, AND CONDITIONS- (1) All rates and charges made, demanded, or received for the sale of electric energy and capacity by each Federal power marketing administration to its electric energy customers shall be the lowest possible rates and charges that will recover from such customers over a reasonable period of years, in accordance with sound business principles, all costs incurred by the United States for the production of electric energy sold by such Federal power marketing administration, including repayment of the capital investment allocated to power and costs assigned by Acts of Congress to power for repayment.

(2) The Commission may modify proposed rates submitted by any Federal power marketing administration and establish terms and conditions consistent with this subsection. In its determination of rates, terms, and conditions for the sale of electric energy and capacity by the Federal power marketing administrations the Commission shall not review policy judgments and interpretations of laws and regulations made by the power generating agencies.

(b) EXISTING RATES- All rates, terms, and conditions for the sale of electric energy and capacity by the Federal power marketing administrations placed into effect on a final basis prior to the date of enactment of this Act shall remain in full force and effect unless the Commission determines, after a hearing held upon its own motion or upon complaint, that the rates, terms, and conditions are inconsistent with subsection (a)(1) and establishes new rates, terms, and conditions.

(c) PERIODIC REVIEW- The Administrators shall periodically review the rates and charges made, demanded, or received by each Federal power marketing administration for the sale of electric energy and capacity. In the event the rates and charges made, demanded, or received by any Federal power marketing administration are inconsistent with subsection (a)(1), the Administrator of that administration shall propose revised rates. Such rates shall be established in accordance with this section, section 5 of the Flood Control Act of 1944 (16 U.S.C. 825s), section 9(c) of the Reclamation Project Act of 1939 (43 U.S.C. 485h(c)), and the Acts specifically applicable to individual projects of the power systems of the power generating agencies.

SEC. 533. REGULATION OF FEDERAL POWER MARKETING ADMINISTRATION TRANSMISSION SYSTEMS.

Notwithstanding section 201(f) of the Federal Power Act, sections 202(h), 205, 206, 208, and 210 through 213 and sections 301 through 304, 306, 307 (except the last sentence of paragraph (c)), 308, 309, 313, and 317 of the Federal Power Act apply to the transmission of electric energy by the Federal power marketing administrations to the same extent and in the same manner as such provisions apply to the transmission of electric energy in interstate commerce by a public utility otherwise subject to the jurisdiction of the Commission under part II of such Act.

SEC. 534. ACCOUNTING.

Not later than six months after the date of enactment of this Act, the Commission shall promulgate rules containing each of the following:

(1) ACCOUNTING PRINCIPLES AND REQUIREMENTS- Procedures to ensure that the Federal power marketing administrations utilize the same accounting principles and requirements as are applicable to public utilities pursuant to parts II and III of the Federal Power Act (16 U.S.C. 792 and following) with respect to accounting for revenue, expenses, investments, and depreciation.

(2) COMPLIANCE- Procedures for the filing of complaints with the Commission by interested persons seeking to ensure compliance with the procedures of this section.

(3) ADMINISTRATIVE RECONCILIATION- Procedures to ensure that the power generating agencies

and the Administrators maintain a consistent set of books and records for purposes of repayment obligations.

SEC. 535. APPLICATION OF ANTITRUST LAW.

(a) IN GENERAL- Each Federal power marketing administration shall be subject to the antitrust laws of the United States with respect to its sale of electric energy and capacity and the operation of its transmission system. For purposes of this section, the term `antitrust laws' has the meaning given such term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

(b) DAMAGES- No damages, interest on damages, costs, or attorney's fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or 15c) from a Federal power marketing administration.

TITLE VI--CONSUMER PROTECTIONS

SEC. 601. ELECTRIC SUPPLY UNFAIR TRADE PRACTICES.

(a) SLAMMING- (1) The Federal Trade Commission may promulgate rules in accordance with section 553 of title 5 of the United States Code for the submittal and verification of a retail electric consumer's selection or change in selection of a retail electric supplier and for the assessment of penalties for violation of these rules.

(2) A person shall not submit or change the selection made by a retail electric consumer if prohibited by law or Federal Trade Commission rules established under paragraph (1).

(3) It shall be unlawful for any person to change the retail electric supplier without the consent of the retail electric consumer.

(b) CRAMMING- (1) The Federal Trade Commission may promulgate rules in accordance with section 553 of title 5 of the United States Code for obtaining the consent of a retail electric consumer for purchase of goods and services other than those expressly authorized by law or any agreement for the purchase of electric energy or related services entered into by the electric consumer and for the assessment of penalties for violation of these rules.

(2) A person shall not charge a retail electric consumer for a particular good or service if such submission or change is prohibited by law or Federal Trade Commission rules established under paragraph (1).

(3) It shall be unlawful for any person to charge a retail electric consumer for electric energy or related services unless expressly authorized by law or by agreement for the purchase of electric energy or related services entered into by the electric consumer.

(c) FEDERAL TRADE COMMISSION ENFORCEMENT- Violation of a rule promulgated under this section shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair and deceptive acts or practices. All functions and powers of the Federal Trade Commission under such Act are available to the Federal Trade Commission to enforce compliance with this section notwithstanding any jurisdictional limitations in such Act.

(d) STATE AUTHORITY- (1) This section does not preclude a State or State commission from prescribing and enforcing additional laws, regulations, or procedures regarding the practices which are the subject of this section, so long as such laws, regulations, or procedures are not inconsistent with the provisions of this section or with any rule prescribed by the Federal Trade Commission pursuant to it.

(2) If the Federal Trade Commission determines that a State's regulations provide equivalent or greater protection than the provisions of this section, such State regulations shall apply in that State in lieu of the regulations issued by the Commission under this section.

(e) OTHER REMEDIES- The remedies provided by this section are in addition to any other remedies available by law.

(f) ENFORCEMENT BY STATES- (1) Whenever an attorney general of any State has reason to believe that the interests of the residents of that State have been or are being threatened or adversely affected because any person has engaged or is engaging in a pattern or practice which violates any rule of the Commission under this section or section 602, the State, as parens patriae, may bring a civil action on behalf of its residents in an appropriate district court of the United States to enjoin such violation, to enforce compliance with such rule of the Commission, to obtain damages, restitution, or other compensation on behalf of residents of such State, or to obtain such further and other relief as the court may deem appropriate.

(2) The State shall serve prior written notice of any civil action under paragraph (1) or paragraph (6)(B) of this subsection upon the Commission and provide the Commission with a copy of its complaint, except that if it is not feasible for the State to provide such prior notice, the State shall serve such notice immediately upon instituting such action. Upon receiving a notice respecting a civil action, the Commission shall have the right--

(A) to intervene in such action,

(B) upon so intervening, to be heard on all matters arising therein, and

(C) to file petitions for appeal.

(3) For purposes of bringing any civil action under paragraph (1) of this subsection, nothing in this chapter shall prevent an attorney general from exercising the powers conferred on the attorney general by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence.

(4) Whenever a civil action has been instituted by or on behalf of the Commission for violation of any rule prescribed under this section or section 602, no State may, during the pendency of such action instituted by or on behalf of the Commission, institute a civil action under paragraph (1) or paragraph (6)(B) of this subsection against any defendant named in the complaint in such action for violation of any rule as alleged in such complaint.

(5) Any civil action brought under paragraph (1) of this subsection in a district court of the United States may be brought in the district in which the defendant is found, is an inhabitant, or transacts business or wherever venue is proper under section 1391 of title 28 of the United States Code. Process in such an action may be served in

any district in which the defendant is an inhabitant or in which the defendant may be found.

(6)(A) Nothing contained in this subsection shall prohibit an authorized State official from proceeding in State court on the basis of an alleged violation of any civil or criminal statute of such State.

(B) In addition to actions brought by an attorney general of a State under paragraph (1) of this subsection, such an action may be brought by officers of such State who are authorized by the State to bring actions in such State on behalf of its residents.

SEC. 602. CONSUMER PRIVACY.

(a) PROHIBITION- The Federal Trade Commission may promulgate rules regarding the disclosure of or access to consumer information in connection with the sale or delivery of electric energy to a retail electric consumer. Such rules shall be promulgated in accordance with section 553 of title 5 of the United States Code.

(b) PERMITTED USE- The rules under subsection (a) shall not prohibit any person from using, disclosing, or permitting access to consumer information referred to in subsection (a) for any of the following purposes:

(1) To facilitate a retail electric consumer's change in selection of a retail electric supplier under procedures approved by the State or State commission.

(2) To initiate, render, bill, or collect for the sale or delivery of electric energy to retail electric consumers or for related services.

(3) To protect the rights or property of the person obtaining such information.

(4) To protect retail electric consumers from fraud, abuse, and unlawful subscription in the sale or delivery of electric energy to such consumers.

(5) For law enforcement purposes.

(6) For purposes of compliance with any Federal, State, or local law or regulation authorizing disclosure of information to a Federal, State, or local agency.

(c) AGGREGATE CONSUMER INFORMATION- The rules under subsection (a) shall permit any person to use, disclose, and permit access to aggregate consumer information and shall require local distribution companies to make such information available to retail electric suppliers upon request and payment of a reasonable fee.

(d) FEDERAL TRADE COMMISSION ENFORCEMENT- Violation of a rule promulgated under this section shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair and deceptive acts or practices. All functions and powers of the Federal Trade Commission under such Act are available to the Federal Trade Commission to enforce compliance with this section notwithstanding any jurisdictional limitations in such Act.

(e) STATE AUTHORITY- (1) If the Federal Trade Commission determines that a State's regulations provide equivalent or greater protection than the provisions of this section, such State regulations shall apply in that State in lieu of the regulations issued by the Commission under this section.

(2) The remedies provided by this section are in addition to any other remedies available by law.

(f) DEFINITIONS- As used in this section:

(1) AGGREGATE CONSUMER INFORMATION- The term `aggregate consumer information' means collective data that relates to a group or category of retail electric consumers, from which individual consumer identities and characteristics have been removed.

(2) CONSUMER INFORMATION- The term `consumer information' means information that relates to the electric energy delivered to any retail electric consumer.

SEC. 603. AGGREGATION.

Part II of the Federal Power Act (16 U.S.C. 824 and following) is amended by adding the following new section after section 217, as added by this Act:

`SEC. 218. PURCHASE OF ELECTRIC ENERGY BY RETAIL ELECTRIC CONSUMERS.

`Subject to not unduly discriminatory or preferential State requirements, each retail electric consumer may designate any entity that aggregates consumers to negotiate on the consumer's behalf the purchase of retail electric energy on an aggregate basis if the consumer is served by a local distribution company whose local distribution facilities are subject to open access, and no State may prohibit any political subdivision of a State or any electric cooperative from serving as an entity that aggregates consumers, if such entity provides open access to any local distribution facilities it may own or operate.'.

SEC. 604. STATE PUBLIC PURPOSE CHARGES.

Section 201(b) of the Federal Power Act is amended by adding the following new paragraph after paragraph (3):

`(4) This Act shall not affect the authority of a State or municipality to require as a charge for delivery of electric energy to, or as a condition for the purchase or receipt of electric energy by, any retail electric consumer located in such State the payment of any charge deemed necessary

by such State or municipality for any purpose, including any of the following:

`(A) To recover transition costs.

`(B) To ensure that adequate electric service is available to all retail electric consumers served by a local distribution company.

`(C) To ensure and enhance the reliability of retail electric service.

`(D) To fund assistance to low-income retail electric consumers.

`(E) To encourage environmental, emerging energy technology, energy efficiency, or energy conservation programs.

`(F) To provide for transition costs of electric utility workers.

Nothing in this paragraph shall require a State or municipality to impose any such charges.'.

SEC. 605. STATE AUTHORITY TO ORDER RETAIL ELECTRIC COMPETITION.

Section 201(b) of the Federal Power Act is amended by adding the following new paragraph after paragraph (2):

`(3) This Act shall not affect the authority of a State or municipality to require retail electric competition or to require the unbundling of transmission and local distribution service for the delivery of electric energy directly to a retail electric consumer.'.

SEC. 606. UNIVERSAL AND AFFORDABLE SERVICE.

It is the sense of the Congress that--

(1) every retail electric consumer should have access to electric energy at reasonable and affordable rates; and

(2) the States should ensure that retail electric competition does not result in the loss of service to rural, residential, or low-income consumers.

TITLE VII--INVESTIGATION AND CORRECTION OF ANTICOMPETITIVE CONDUCT

SEC. 701. UNIFORM INVESTIGATION AUTHORITY.

Section 307(a) of the Federal Power Act (16 U.S.C. 825f(a)) is amended as follows:

(1) By inserting `electric utility, or transmitting utility' after `person' each time it appears.

(2) By striking the period at the end of the first sentence and inserting the following: `or in obtaining information about the sale of electric energy at wholesale in interstate commerce and the transmission of electric energy in interstate commerce.'.

SEC. 702. UNIFORM FERC REFUND AUTHORITY.

(a) SCOPE OF AUTHORITY- Section 206 of the Federal Power Act (16 U.S.C. 824e) is amended as follows:

(1) In subsection (a), strike `public utility for any transmission or sale subject to' and insert `entity for any transmission or sale by or to a public utility subject to'.

(2) In subsection (b), in the seventh sentence, strike `the public utility to make'.

(b) CONFORMING AMENDMENTS- Section 201(b)(2) of such Act (16 U.S.C. 824(b)(2)) is amended as follows:

(1) In the first sentence, strike `The provisions of section 210' and insert `Notwithstanding subsection (f), the provisions of section 206, 210'.

(2) In the second sentence strike `section 210' and insert `section 206, 210'.

SEC. 703. CRIMINAL AND CIVIL PENALTIES.

(a) CRIMINAL PENALTIES- (1) Section 316(a) of the Federal Power Act (16 U.S.C. 825o(a)) is amended by striking `$5,000' and inserting `$1,000,000', and by striking `two years' and inserting `five years';

(2) Section 316(b) of the Federal Power Act (16 U.S.C. 825o(b)) is amended by striking `$500' and inserting `$25,000'.

(b) CIVIL PENALTIES- Subsections (a) and (b) of section 316A of the Federal Power Act (16 U.S.C. 825o-1) are amended by striking `section 211, 212, 213, or 214' each place it appears and inserting `part II'.

END